AAR To Sell Telair Cargo Group To TransDigm For $725 Mln - QUick Facts

(RTTNews) - AAR Corp. (AIR) said it has agreed to sell its Telair Cargo Group of business to TransDigm Group Inc. (TDG) for a purchase price of about $725 million in cash, subject to adjustments. The Telair Cargo Group is comprised of Telair International, Telair U.S., and Nordisk Aviation Products.

AAR will report its Telair Cargo Group as discontinued operations beginning in the third quarter of fiscal 2015. The sale is expected to close in the fourth quarter ending May 31, 2015, subject to regulatory approval.

When the sale closes, AAR expects to report a pre-tax gain of about $200 million after expenses and fees.

As a result of these transactions, AAR will report its results in two new segments - Aviation Services, comprised of Aviation Supply Chain and Maintenance, Repair and Overhaul or MRO, and Expeditionary Services, comprised of Airlift & Mobility.

Further, AAR said that its third-quarter results will be less than expected, due to fewer flying positions in its Airlift operation, costs associated with the Telair Cargo transaction, and bid costs for large government contracts.

In a separate statement, TransDigm said it expects to finance the acquisition of Telair Cargo through existing cash on hand and possible use of its existing revolving credit facility.

Telair revenues are anticipated to be about $300 million with EBITDA margins approaching 20% for fiscal year ending May 2015. The business employs just over 600 employees in its various locations worldwide.