B/E Aerospace To Split Into Two Companies; Lifts Forecast - Update

(RTTNews) - B/E Aerospace, Inc. (BEAV), a maker of aircraft cabin interior products, Tuesday announced that its Board of Directors has commenced a process to separate its businesses into two independent, publicly traded companies, such as manufacturing and services.

The company also lifted its fiscal 2014 earnings forecast to $4.35 per share from previously expected about $4.30 per share. On average, 20 analysts polled by Thomson Reuters expect the company to post earnings of $4.39 per share for the year. Analysts' estimates typically exclude special items.

In its separation plan, in the two new firms, one will be focused on aircraft cabin interior equipment - design, development, manufacturing, certification and direct sales, i.e., Manufacturing Co.. The other will be focused on distribution, logistics and technical services for the aerospace and energy services markets, i.e., Services Co.

The company said it currently plans to separate the businesses by way of a tax-free distribution to B/E's shareholders, subject to further financial, tax and legal analysis. Following this, shareholders would hold shares in two independent and publicly traded companies.

The completion of the separation transaction is subject to certain customary conditions, and would take place in the first quarter of 2015.

The decision represents an important step in its ongoing strategic review process, the company said, adding that its Board and management are continuing to review and aggressively pursue its strategic alternatives to enhance value to shareholders.

It was in early May that B/E Aerospace announced that it was engaged in a process to explore and evaluate its strategic alternatives, including, amongst others, a possible sale or merger, the sale, spin-off or other separation of selected businesses within B/E or other strategic transactions involving the company or its businesses.

According to the firm, the decision to separate the firm reflects a further evolution of its strategies emphasizing the development of its businesses, addressing their distinct needs and thereby increasing their value to shareholders.

Amin Khoury, Chairman and Co-Chief Executive Officer, said, "Separating these highly successful businesses into two industry-leading companies will allow each to benefit from increased management focus and operational flexibility, as well as allow the management teams and boards of directors of each business to determine the optimal capital structure, free cash flow allocation policy, growth strategy, compensation system and performance measurement metrics."

The company said it plans to provide further details about the specific composition of the Boards of Directors and management teams of each separate companies at a later date.

B/E Aerospace noted that there can be no assurance that any transaction, including any separation transaction, will ultimately occur or, if a transaction does occur, its terms or timing.

The company has retained Citigroup as its financial advisor and Shearman & Sterling LLP as its legal advisor in connection with this process.

In pre-market activity, B/E Aerospace shares are currently trading at $99.50, up $0.62 or 0.63 percent.