Cleveland, Ohio-based leading global aerospace components and systems provider TransDigm Group Inc. (NYSE: TDG) agreed to acquire ILC Holdings Inc., the parent company of Data Device Corporation (DDC), from private equity firm Behrman Capital, for $1 billion in cash. DDC is a leader in high-reliability connectivity, power, and control solutions for aerospace, defense, and industrial applications.
TransDigm Group is a leading global designer, producer and supplier of highly engineered aircraft components, systems and subsystems for use on nearly all commercial and military aircraft in service today. The company made its initial public offering and became listed on the NYSE on March 15, 2006, at a price of $21.00 per share. TDG shares rose 2.38% today, closing at $254.65, giving the company a market value of $13.49 billion.
DDC is a supplier of databus and power controls used in military avionics, commercial aerospace and space applications. The company’s core MIL-STD-1553 databus product line has a large installed base of systems worldwide that spans hundreds of unique military and commercial platforms. Representative DDC platforms include military programs such as the JSF, F-18, Eurofighter, C-130, A400M, F-15 and Apache, as well as newer commercial platforms such as the 787, A350XWB, and 777X. The business employs 650 employees in its various locations worldwide. DDC’s primary manufacturing facility is located in Bohemia, New York with additional facilities located in Mexico, the United Kingdom, and California.
“DDC has a strong presence across major military aircraft platforms and a growing presence on commercial aircraft. This is another sizable acquisition opportunity that meets our strategic, operational and value-creation criteria,” stated W. Nicholas Howley, TransDigm’s chairman and CEO. “The vast majority of DDC’s revenue comes from highly engineered, proprietary products with substantial aftermarket content. We are pleased with the opportunity to acquire a business of this size that has such an outstanding reputation with its customers and where we see opportunities for significant value creation.”
“We are very proud of our investment in Data Device Corporation and the role we played in building the company’s leadership position,” said Grant G. Behrman, Managing Partner of Behrman Capital. “The DDC value creation story is an exciting one and we believe the business is exceptionally well-positioned for further growth under its new ownership.”
DDC revenues are anticipated to be over $200 million for the fiscal year ending December 2016 with approximately 75% coming from the defense market and the remainder primarily from the commercial transport market. Approximately 70% of revenue is derived from the aftermarket, with nearly all of the revenue from proprietary and sole source products, with 45% of revenue being derived from customers outside of the United States.
TransDigm expects to finance the acquisition through a combination of cash on hand, its existing revolving credit facility and new debt.
The deal is expected to close before the end of fiscal 2016, subject to regulatory approvals and customary closing conditions.
TransDigm Group, formerly known as TD Holding Corp., was established in 1993 by W. Nicholas Howley and Douglas W. Peacock, after acquiring Adel Fasteners, Aero Products Component Services, Controlex Corporation and Wiggins Connectors from IMO Industries. The company grew both organically and through a strategy of ongoing acquisitions. In 1997, the company acquired Marathon Power Technologies.
In 1998, TransDigm was acquired by private equity firm Odyssey Investment Partners, which continued to grow TransDigm through various add-on acquisitions, including Adams Rite Aerospace, Christie Electric and Champion Aviation.
In 2003, TransDigm was acquired by private equity firm Warburg Pincus. With the firm’s support, TransDigm then made multiple additional acquisitions over the next few years, inc;uding Avionic Instruments, Skurka Engineering, Fluid Regulators, Skurka Engineering, Electra-Motion Industries, CDA InterCorp, Aviation Technologies and Bruce Industries. TransDigm continued its acquisition spree, including among others, GE Aviation’s Electromechanical Actuation Business in 2013, and more recently Telair and Franke Aquarotter.
Behrman Capital was founded in 1991 by Grant G. and Darryl G. Behrman. The firm invests in management buyouts, leveraged buildups and recapitalizations of established growth businesses. The company’s investments are focused in three industries: defense and aerospace, health care services, and specialty manufacturing and distribution. The firm is based in New York City and San Francisco, and has raised five funds with a combined capital base in excess of $3.0 billion.