Quebec aerospace manufacturer Heroux-Devtek Inc. is selling about one-third of its business to an American company for $300 million in cash to focus on its landing gear division in a deal that sent the company's stock soaring on Tuesday.
Shares in Heroux-Devtek closed up $2.60, or 33 per cent, at $10.45 on the Toronto Stock Exchange. Earlier, they traded as high as $11.75 and beat a record high of $10 per share set at the end of 2001.
Heroux-Devtek is one of the Canadian companies that's involved in the Lockheed Martin F-35 stealth fighter program, a multi-country initiative led by the United States.
The Montreal-area company will remain involved in the F-35 program through the landing-gear business that it's keeping.
Precision Castparts Corp. of Portland, Ore., will acquire Heroux-Devtek's Aerostructure and Industrial Products division, which had about $130 million of annual sales — about one-third of total revenue.
"The acquisition of these operations continues to move us much farther down the road toward strategically building a more cohesive, far-reaching aerostructures business within our Fastener Products segment," Mark Donegan, chairman and chief executive officer of Precision Castparts Corp., said in a statement.
"In addition to serving our current customer base, Heroux-Devtek strengthens our presence with such key customers as Lockheed, Bombardier, and Gulfstream."
Chief executive Gilles Labbe said the Heroux-Devtek will focus on growth and possible acquisitions in the landing gear division.
"Our vision is to continue to build Heroux-Devtek into a Quebec-based world-class organization in this core market," Labbe told analysts on a conference call to discuss the deal.
Labbe said there are opportunities to increase growth in the land gear division and the company will be in a stronger position to do so as a result of the sale of its other division.
"It will be a more pure play in the aerospace business and a niche market also. We will develop more and more engineering products in the aerospace sector," he said.
"We found a way to unlock shareholder value and now we will concentrate on what we know best. The business that we are keeping represents two-thirds of the revenue."
After the sale, Heroux-Devtek will have more than 1,000 employees in Canada and the United States with about $250 million of annual revenue.
Labbe said related landing gear products such as gear retraction systems, hydraulic systems and flight controls can be developed by the company's engineers and sold.
The deal affects Heroux-Devtek's aerostructure and industrial products locations in suburban Montreal, Mexico, Texas and Ohio that employ about 440 people in total.
Labbe said Precision Castparts Corp. wants to make the aerostructure components and industrial products division a world leader..