Back in June 2005, the Canadian private equity firm, Onex formed a new company, Spirit AeroSystems Holdings, to buy the aircraft component factory business from The Boeing Company (NYSE:BA).
In the deal, Onex invested roughly $375 million and borrowed $700 million.
This week, Spirit went public. And it was a huge windfall for Onex, which got $1.16 billion in cash plus an equity stake worth about $1.9 billion.
Another example of private equity firms feeding at the trough? Perhaps. However, Onex had to deal with contentious negotiations with Spirit's unions. Basically, the unions agreed to wage cuts -- in exchange for equity.
It was certainly a good move for workers. On average, a union employee got about $60,000 in a stock windfall.
Also, Onex made some other smart moves, such as purchasing a factory from BAE Systems PLC (ADR) (OTC:BAESY).
Oh, and timing has been good, too. There's been a big jump in airline orders -- especially for Spirit's largest customer, Boeing.
Tom Taulli is the author of various books, including the Complete M&A Handbook. He operates InvestorOffering.com.
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Reader Comments (Page 1 of 1)
11-23-2006 @ 3:47AM
Vince Chan said...
Onex CEO Gerry Schwartz is well-followed in the Canadian investing community as someone who is able to pull the trigger on deals that have just worked! This is another example.