Jet deal gives Carlyle big stake in Triumph Group (Updates)

Shares of Triumph Group jumped more than 10%, to nearly $70, in morning trading on news it will buy Carlyle Group's Vought Aircraft Division, raising the question: Is Triumph paying enough?

The deal, if approved by shareholders, would vastly expand the Chesterbrook-based military and commerical aircraft parts maker. Carlyle, the nearly $100 billion-asset, multinational, Washington-based buyout group whose past investors include members of the Bush family, "will own approximately 31%" of Triumph after the deal and name Vought boss Elmer L. Doty and two more directors to Triumph's board.

Triumph agreed to pay $525 million in cash and around $460 million in stock in the negotiated deal; including Vought's debt, the companies valued the sale at $1.44 billion.

The merger would confirm Triumph as a leading military and commerical aircraft parts maker, employing more than 1,000 manufacturing and design engineers. Triumph ceo Richard Ill told investors that Boeing and other clients would "welcome" the combination. Vought will account for nearly two-thirds the combined companies' $3 billion in yearly sales.  Triumph statement here, Vought here.

Vought makes wings, fuselages and other parts ("everything but the nose and the engines," says ceo Elmer Doty) for jets by Boeing (more than half the total), Gulfstream (business jets), Airbus, Sikorsky, Cessna, Hawker, Northrop Grumman, among other products & customers.

Military contracts are about a third of Vought's business (it builds major sections for the C-17 Globemaster III, the made-in-Delco V-22 Osprey, the H60 Black Hawk, among others) and will be around 40% of the combined company and likely to rise, said Ill. "We're well positioned for a cycle recovery" in cargo carriers, he added.

Savings? Triumph "will be looking at" plant closings, said Ill in response to an analyst question. Also, "Vought currently purchases close to $200 million of items producetd by Triumph from other manufacturers... We think we can be competitive in manufacturing some of those." He also expects insurance savings.

Based in Dallas, Vought has plants in Tennessee, California, Georgia, Washington, and Florida, and recently sold a plant in South Carolina to Boeing. Triumph has plants in North Wales, Pa., and in Texas, California, Connecticut, 15 other states, and western Europe, and is building a plant in Mexico.