Rockwell Collins Inc. COL announced that it has concluded the sale of ARINC Aerospace Systems Engineering and Support (ASES LLC) to Field Aerospace, a subsidiary of the privately held U.S. firm, Field Aviation Inc.
On Dec 23, 2013, the company had acquired ARINC Inc. – an airline communications and information processing solution major – for $1.4 billion. The addition of ARINC’s high-quality ground network and services boosted Rockwell Collins’ existing information management capabilities with its application beyond avionics and cabin technologies.
ARINC contributed $137 million to first-quarter fiscal 2015 revenues. In fact, the company witnessed top-line growth primarily on the back of the ARINC acquisition.
The company is equally focused on divesting its non-core and non-performing businesses. Since the ARINC acquisition, Rockwell Collins has sold one small business unit – the 10-person Industry Standards Organization based in Annapolis – to SAE International of Warrendale, PA.
The company was looking for a buyer suitable for ASES as the unit did not fit in with its long-term strategy. Following the sale of ASES – which employs about 300 people, mostly in Oklahoma City − the unit will operate as Field Aerospace.
ASES mainly installs after-market communications equipment in military aircraft, while Rockwell Collins focuses on designing and building engineering systems. Per the company, ASES’ expertise is not a part of its core competency.
Rockwell Collins is the foremost global supplier of communications and avionics equipment for both commercial and military customers. The company’s balanced exposure to both types of customers allows it to use government funding to develop products for the dual-end market. This leads to higher volume sales, which create economies of scale in cost-sensitive government contracts.
Rockwell Collins holds a Zacks Rank #2 (Buy). Equally well-placed stocks in the same sector include GenCorp Inc. GY, Spirit AeroSystems Holdings, Inc. SPR and TransDigm Group Incorporated TDG.
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