Global Fastener News

2001 FIN – B/E Aerospace Enters Fastener Business With Acquisition of M&M Aerospace Hardware

October 17
00:00 2012

August 21, 2001 FIN – B/E Aerospace Inc. announced it has reached an agreement to acquire M&M Aerospace Hardware Inc. for $177 million.

M&M distributes aerospace fasteners with 70% of its sales in the aftermarket. M&M has a product line of 93,000 items for 3,700 customers worldwide.
B/E manufactures and distributes aircraft cabin interior products and supplies most of the world’s airlines and aircraft manufacturers. B/E has 4,000 employees and annual sales of $700 million and is listed on the Nasdaq.

CEO Robert Khoury said the acquisition permits B/E to leverage existing sales and customer support organizations, doubles B/E’s addressable market, increases its percentage of sales in the aftermarket and becomes a platform for future transactions leveraging M&M’s information systems for inventory management and product pricing.
“In recent months B/E has considered a number of options for accelerating growth and achieving superior financial returns for shareholders,” Khoury said. “We continue to expect our existing markets to provide attractive financial returns. However, achieving more significant growth and the advantages of greater size and scope requires a strategic expansion into a new but closely related market.”
Khoury pointed to the aerospace fastener sector as offering “an attractive opportunity while remaining close to our existing customers and markets.”

$2.2 Billion Market
B/E estimates the global aerospace fastener sales at $2.2 billion and termed the aftermarket “growing and predictable.”
“Aerospace fasteners are consumed during aircraft reconfigurations and passenger-to-freighter conversions and must be replaced at mandated maintenance intervals,” according to a B/E statement. “As the number of aircraft in the worldwide fleet grows, demand for fasteners is expected to grow as well.”

Founded in 1974, M&M is based in Miami near B/E’s Wellington, FL headquarters and several of B/E’s plants.
“We believe M&M provides an excellent strategic fit with our vision for the future and enhances opportunities for organic growth,” Khoury said. “We see several synergies from this acquisition. One of the most significant is the opportunity to expand M&M sales to B/E’s existing aftermarket customer base.”
B/E already has 22 permanent customer support staff onsite at major carriers. “While several of these carriers are currently M&M customers, all are potential customers. By leveraging both our existing sales organization and our customer support staff, we expect to expand M&M’s sales to our customer base, and we believe that we can accomplish that more rapidly than M&M could on its own.”
M&M will have access to B/E’s JIT information technology and e-commerce and can save $15 million per year. M&M’s purchasing, freight and logistics practices can be applied to B/E’s entire business.
“M&M is well positioned to handle substantial growth in volume with minimal additional capital investment,” Khoury said. “With $30 million recently invested in infrastructure, the company now has new warehouse facilities and newly installed information technology.”
The purchase price consists of $152million in cash and $25 million in common stock. M&M shareholders can earn up to $23 million more in B/E stock based on M&M performance.
The $177 million price is 6.4 EBITDA.
Closing of the deal is expected within a month. Web: ©2001/2012 Fastener Industry News
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