HEICO Corp. (HEI.US) specializes in niche services such as complex aircraft maintenance, its shares gaining 8% today after announcing an all-time record acquisition. HEICO at the same time one of the world's largest manufacturers of advanced mechanical parts for the aerospace, defense or automotive industries, as well as advanced electronics. Heico valued the acquisition of Wencor at $2.05 billion. The company is involved in both design engineering and development as well as repairs, which it says reduce costs for aerospace customers.
- Due to its strong cash position and lack of incumbent debt, the company is continuing its strategy of increasing market share through acquisitions of healthy companies, in niche industries. The purchase of Wencor will be the largest 'deal' in the history of Heico, which has already made dozens of acquisitions since the 1990s;
- A potential economic downturn for large cash-flow positive companies like HEICO could present an opportunity to acquire assets at a discount;
- According to the company, the Wencor acquisition will close by the end of the year. It will cost the company $1.9 billion in cash and the equivalent of $150 million in HEICO shares. Airlines and aircraft repair shops in North America are increasingly relying on used and generic parts to maintain aircraft. High and rising costs and tight chains are putting pressure on the aviation industry;
- HEICO founder and CEO Laurans Mendelson indicated that the acquisition will greatly expand the company's aftermarket product offering. Wencor parts and repairs can be found in hydraulic, pneumatic, electronic and electromechanical cockpit and galley systems in many aircraft models;
- Managed from the beginning by the Mendelson family, the company has had an impressive history of stock market growth and today its shares soared to new peaks at $180. At the same time, HEICO shares on the fundamental side remain among the most expensive on all of Wall Street.
HEICO Corp (HEI.US), H4 interval. The price bounces above SMA200 and 71,6 Fibonacci retracement of upward wave from June 2022. Source: xStation5
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