GE Aerospace Acquires CPP for $11.75B

GE Aerospace is significantly expanding its manufacturing footprint with the acquisition of Consolidated Precision Products (CPP) for an enterprise value of $11.75 billion. This strategic move aims to secure critical production capacity for complex metal components essential for both commercial and defense aircraft engines and airframes. The deal marks a pivotal moment for GE Aerospace, transforming a long-standing supplier relationship into integrated operational capability, addressing persistent supply chain bottlenecks that have hampered engine output.

CPP, a specialist in producing intricate metal parts through advanced casting techniques, manufactures components such as airfoils – the high-temperature rotating and stationary blades within jet engines – and structural castings for airframes and engine casings. The company's expertise extends to precision sand casting and the creation of ceramic cores and wax tooling, vital for forming complex internal cooling passages in airfoils. This acquisition provides GE Aerospace with direct control over a vital segment of its production process, utilizing materials ranging from superalloys and titanium to aluminum and magnesium.

The transaction brings an end to CPP's extensive private equity ownership journey. Initially acquired by Arlington Capital Partners in 2008, the company was subsequently purchased by Warburg Pincus in 2011. In 2019, Berkshire Partners joined Warburg Pincus as a financial partner through a recapitalization. During this period of private equity stewardship, CPP expanded its operational base from 11 facilities across three countries to over 20 locations globally, serving major aerospace manufacturers like Boeing and Airbus.

GE Aerospace Chairman and CEO, H. Lawrence Culp, Jr., emphasized the strategic necessity of this investment. "Investing in mission-critical casting capacity is needed to support the strong simultaneous demand across commercial engines, aftermarket and defense," Culp stated. He further elaborated that integrating CPP's manufacturing prowess with GE Aerospace's technological capabilities is expected to enhance capacity, boost performance, and accelerate the development of next-generation engine technologies.

The acquisition is valued at approximately 18 times CPP's projected 2027 EBITDA, factoring in anticipated cost savings. GE Aerospace plans to finance the transaction with $7 billion in cash and the remainder through debt. This move positions GE Aerospace to better manage its supply chain and capitalize on the robust demand in the aerospace sector, which has seen significant growth in commercial air travel recovery and sustained defense spending. The aerospace manufacturing sector, particularly for high-precision components, is experiencing increased pressure to scale production efficiently.

CPP, founded in 1991 and employing around 6,600 individuals across facilities in the United States, Belgium, Poland, Slovakia, and Mexico, is led by CEO James Stewart. Stewart expressed enthusiasm for the deepened relationship with GE Aerospace, noting the buyer's commitment to supporting CPP's continued expansion and strategic vision. This integration is anticipated to yield substantial value and drive mutual success for both entities within the competitive aerospace industry.