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Aircraft parts maker TransDigm to buy rival Esterline for $4B; shares fall

U.S. aircraft parts maker TransDigm Group Inc. agreed to acquire rival Esterline Technologies Corp. for about $4 billion including debt, the companies said.

TransDigm will purchase all the outstanding shares of Esterline's common stock for $122.50 per share in cash, representing a 38% premium to Esterline's closing price on Oct. 9.

The boards of both companies approved the deal, which is expected to be completed in the second half of 2019.

TransDigm said it will finance the acquisition primarily through cash on hand of about $2 billion and new term loans.

The target, which is expected to generate $2.0 billion in fiscal-year 2018 revenue, manufactures and supplies specialized aerospace, defense and industrial products.

"Esterline's core aerospace and defense business consists of primarily proprietary, sole source products with significant and growing aftermarket exposure," said TransDigm Executive Chairman Walter Nicholas Howley. "We view this as highly complementary to our existing business."

TransDigm shares fell more than 4% shortly after markets opened and following the announcement of the deal, while Esterline's stock soared over 30%.