Heico Corp. is planning its biggest MRO industry transaction to date, setting its sights on an acquisition of Wencor Group by the end of 2023.
Under an agreement announced May 15, Heico seeks to acquire Wencor Group for $2.05 billion, comprised of a combination of cash and stock. It says the transaction will be its largest ever in purchase price.
Heico expects the lofty price tag to pay off. It anticipates that Wencor will generate approximately $724 million in adjusted proforma revenues and $153 million in earnings before interest, taxes, depreciation and amortization this year.
Based in Peachtree City, Georgia, Wencor is a commercial and military aftermarket company that provides a range of products and services, including aircraft replacement parts, aftermarket parts distribution, and aircraft and engine accessory component repair and overhaul. It has 19 facilities across the U.S. and employs approximately 1,000 people.
Heico plans to make Wencor part of its Hollywood, Florida-based Flight Support Group (FSG), which provides design, engineering, manufacturing, repair, overhaul and distribution services for FAA-approved aircraft parts. According to Eric Mendelson, co-president and CEO of the FSG, Heico has wanted to acquire Wencor for a long time.
“They’re in spaces that are very complementary to Heico and their product set is extremely complementary, whether in distribution, commercial or military, PMA parts or repair. For example, in distribution they’re in bearings in a big way and we’re not,” says Mendelson. “We thought this acquisition would be perfect for Heico and I think Wencor fits really well.”
Wencor CEO Shawn Trogdon will continue to lead the business. “Initially the plan is for [Wencor] to continue to operate independently. As time goes on, we think that there are opportunities to cooperate and work together,” says Mendelson, noting that Heico plans to engage in “best practice sharing” between the two companies.
The acquisition will be Heico’s second so far this year. In January, Heico’s Electronic Technologies Group acquired Exxelia International, a manufacturer of electronic components and rotary joint assemblies for aerospace and defense applications. Last year, Heico and its subsidiaries acquired seven companies: Ironwood Electronics, Sensor Systems, Accurate Metal Machining, Pioneer Industries, TRAD, Flight Microwave Corporation and Charter Engineering.
While Mendelson did not share specific details about other potential acquisitions on the horizon, he noted that the market’s strength is favorable for future growth. “There are a lot of other entrepreneurs who are interested in joining the Heico family, so we’re in constant dialogue and I’m very excited for the future,” he says.
In the first quarter of 2023, Heico’s net sales increased 27% compared to the first quarter of 2022 to what it says is a record $620.9 million. Its operating income increased 31% to $129.4 million during the same period. It plans to release its latest quarterly earnings on May 23.
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