DOW JONES NEWSWIRES
Woodward Governor Co. (WGOV) will buy HR Textron from Textron
Inc. (TXT) for about $365 million in a move aimed at bolstering its
airframes systems business.
Woodward, a maker of industrial control equipment, also lowered
its fiscal 2009 outlook, reflecting a bigger-than-expected decline
in orders.
Chief Executive Thomas A. Gendron said adding HR Textron would
position Woodward for "greater growth in motion control
applications in the aerospace and defense markets."
HR Textron, which had net sales of about $260 million in 2008,
is expected to be neutral to Woodward's earnings in fiscal 2009 and
to add to earnings in fiscal 2010.
Separately, Textron said the sale would generate about $265
million in net cash proceeds and would reduce 2009 earnings by
about 5 cents a share.
"This transaction is consistent with Textron's financial
strategy and our defense and intelligence systems strategy," said
Chief Executive Lewis B. Campbell.
Textron has been battling a slump in orders for business jets
and a canceled defense contract. In recent months, the defense
contractor and aircraft maker said it would cut 14% of its work
force and shut most of its commercial-finance business amid
unstable credit markets.
Woodward said it cut guidance because it is beginning to see
larger-than-expected declines in order volumes in several markets,
especially industrial engines, business jets and power distribution
controls.
The company now expects adjusted earnings of $1.40 to $1.65 a
share on revenue of $1.3 billion to $1.4 billion for the fiscal
year ending Sept. 30. Last month, it affirmed its November forecast
of earnings of $1.65 to $1.90 a share on revenue of $1.4 billion to
$1.5 billion.
Woodward also said it would continue restructuring efforts and
expects to post a charge of about 13 cents a share.
Woodward said it has enough funding to complete the HR Textron
acquisition, which is expected to close in April. The company has
$215 million available under its $225 million revolving credit
facility and has a commitment for a $175 million, 364-day bridge
facility.
Shares of Woodward rose 0.4% to $17.29 in after-hours trading.
The stock price has fallen 65% in the past six months. Textron
shares were unchanged at $5.65, more than 90% off the 52-week high
at the end of May.
-By Kathy Shwiff, Dow Jones Newswires; 201-938-5975;
Kathy.Shwiff@dowjones.com