Analysts: New Company Must Develop New Models To Succeed
The deal recently inked
between the Onex Corporation - Goldman Sachs partnership and
Raytheon for the sale of Raytheon Aircraft is long from finished.
Yes, all parties have agreed on the $3.3 billion price tag, and
that the new company is to be called Hawker Beechcraft Corporation,
but there are still many i's to dot and t's to cross before it's
all over and done.
According to the Wichita Business Journal, there are months of
due diligence and corporate and regulatory approval to come before
the deal is complete -- about six months of work are still left, in
The deal announced last month includes the sale of all of
Raytheon Aircraft's facilities in Wichita, KS, Salina, KS, Dallas,
TX and Little Rock, AR, as well as the company's FBOs in the US, UK
and Mexico. The company has a total of 8,500 employees, with 6,300
Although there are many corporate and legal hurdles left to
leap, the most-often asked questions seem to revolve around foreign
ownership issues. Raytheon Aircraft supplies the US military with
the T-6A Texan II trainer, and many wonder how the US government
will react to Canadian ownership of a company that supplies
Industry consultant William Alderman told the Journal, "It's a
valid question. But if, for goodness sake, the British can build
the transport for our president, do you think we'd have a problem
with our neophyte pilots training in Canadian aircraft?"
Alderman is referring to the DOD's decision to award a
Lockheed Martin-led consortium a contract for the presidential
helicopter fleet. About a third of the construction for the new
choppers occurs outside the US, with the largest part of that going to the
Alderman says the biggest chance of a show-stopping
problem will come during the due diligence inspection of
Raytheon's books. If after reviewing the balance sheets the
purchasing partnership believes it's been misled, the deal could
Be that as it may, says Alderman, "My personal experience has
been is that when a term sheet has been signed, it's about a 70
percent probability the transaction will be completed."
What may be an even bigger obstacle to the fledgling
company's ultimate success is the competition. Experts say the
company will have to expand its product line if it's to compete in
a market flooded with choices.
President and CEO of Cessna Jack Pelton told the Journal he's
looking forward to competing with Hawker Beechcraft.
"Now that it becomes a stand-alone aircraft entity, that shows
they're intent to be committed to the markets that they're in and
the industry," Pelton says. "We're going to see some investments
over time, and that's all positive."