GKN Buys Stellex to Position Itself in Titanium
GKN plc of the UK has agreed to acquire the US firm Stellex Aerostructures from the Carlyle Group. Stellex is a leading provider of highly engineered subsystems and components for the aerospace and defense industries. They operate three divisions. Stellex Monitor Aerospace, Inc. and Stellex Precision Machining, Inc. specialize in large complex machined parts and structural sub-assemblies for the aerospace industry. Stellex Bandy Machining, Inc. provides precision aircraft hinges and other structural components for the aerospace and space industries. As GKN’s release notes:
“The combination of GKN’s existing advanced composite structures and metals business with the operations of Stellex will create a leading manufacturer of titanium aircraft and engine structures.”
So, why this particular combination?
“GKN is… successfully taking advantage of the growth in composite content in both civil and military aircraft. There is also a growth trend in the use of titanium… Titanium structures will account for approximately 20% of the weight of the new F-35 Joint Strike Fighter and 15% of the Boeing 787 airliner – more than twice the levels of the aircraft they replace which will drive a doubling in titanium usage within the industry over the next ten years.
Approximately 65% of Stellex revenues are on civil aircraft which increases GKN’s exposure to this sector. Stellex has secured strong positions on market leading civil programmes such as the Boeing 787 and 777 and in defence has a strong position on the F-35.
Stellex employs approximately 650 people on three US sites in New York, Kansas and California and has current revenues of more than $120 million with a strong future growth profile. GKN is acquiring the business, with reported gross assets of $71 million at December 31, 2005, from the Carlyle Group and management, the terms of which have not been released.”
DID has covered industry issues around titanium, from US strategic metals supply laws to moves by Boeing to secure access to titanium stock, to Stellex competitor Stork’s advances in high-precision titanium machining.
The acquisition is subject to certain regulatory approvals and completion is expected later in 2006. See GKN plc release, and also The Carlyle Group’s release.
- US DoD Advanced Materials and Processes Technology Information Analysis Center (Vol. 6, #2) – Lowering the Cost of Titanium [within this PDF file].