Ducommun Incorporated Rejects Unsolicited, Non-Binding Indication of Interest From Albion River
April 16 2024 - 7:30AM
Ducommun Incorporated (NYSE: DCO) (“Ducommun” or the
“Company”), a global supplier of innovative electronic systems and
structural solutions for the aerospace and defense industry, today
responded to an unsolicited, non-binding indication of interest
dated April 1, 2024 from Albion River LLC (“Albion River”), a
private direct investment firm, to acquire all outstanding shares
of Ducommun for $60.00 per share in cash. The Board of Directors
has unanimously determined it is not in the best interests of the
Company and Ducommun shareholders to pursue further discussions
regarding the proposal.
Consistent with its fiduciary duties and in consultation with
its legal and financial advisors, our Board of Directors carefully
reviewed and considered the offered pricing and the underlying
proposed actions. Following that review, our Board of Directors
concluded that the Company’s previously disclosed Vision 2027
Strategy reflects a substantially better long-term value creation
opportunity for Ducommun’s shareholders.
Over the past seven years, our Board and Management team have
effectively transformed the Company’s business with strategic
acquisitions of engineered product businesses with high aftermarket
mix, implementation of a value-based pricing strategy, significant
facility consolidation, improved operations and customer metrics, a
leaner management structure and many other cost reduction actions.
Despite the impact of the COVID-19 pandemic and the 737MAX on our
markets, Ducommun’s revenue has grown from $551M in 2016 to a new
all-time revenue record of $757M in 2023. Also, Ducommun’s EBITDA
margins have expanded from 10% in 2016 to 13% in 2023. As a result,
the Company’s shareholders benefitted from an increase in market
capitalization from approximately $286M at the end of 2016 to
approximately $760M at the end of 2023. In addition, the Company
managed through the COVID-19 pandemic and 737MAX with limited
impact on its Adjusted EBITDA despite significant deterioration in
the commercial aerospace industry. This was accomplished by growing
its military and space business from $278M in 2018 to $421M in 2022
and through proactive cost management.
Since December 2022, Ducommun management has been executing its
Vision 2027 Strategy by consolidating its facility footprint,
continuing its targeted acquisition program, increasing the revenue
proportion of engineered product and aftermarket content, executing
our offloading strategy with defense primes in high growth segments
of the defense budget, and by expanding content on key commercial
aerospace platforms. These strategic initiatives already have
positioned Ducommun to benefit from the continuing recovery in
aircraft production rates over the next several years. Ducommun’s
market capitalization has increased to approximately $760M at the
end of 2023 from approximately $605M at the end of 2022, a 25.6%
increase in a single year. Our Board of Directors and management
team expect that, as previously disclosed in our Vision 2027
Strategy, by 2027 Ducommun will achieve $950M to $1,000M in net
revenues (representing a 33 to 40% increase since 2022), with
approximately 18% adjusted EBITDA margins. This would represent a
gain of approximately 470 basis points since 2022 and approximately
13% adjusted operating income margins (an increase of approximately
470 basis points since 2022).
Our Board of Directors therefore believes that Albion River’s
offered price and generic proposed actions significantly
undervalues Ducommun and could distract our team from our Vision
2027 Strategy. Therefore, our board has reaffirmed that Ducommun is
not for sale. We remain committed to our proven strategy to
substantially grow the value of Ducommun. We value the views of our
shareholders, and we are happy to consider any useful ideas to
increase the long-term value of Ducommun. Our Board of Directors
and management will continue to listen to all Ducommun shareholders
and act in their collective best interests.
RBC Capital Markets, LLC is acting as a financial advisor to
Ducommun, and Simpson Thacher & Bartlett LLP is acting as legal
counsel.
About Ducommun Incorporated Ducommun
Incorporated delivers value-added innovative manufacturing
solutions to customers in the aerospace, defense and industrial
markets. Founded in 1849, the company specializes in two core areas
– Electronic Systems and Structural Systems – to produce complex
products and components for commercial aircraft platforms,
mission-critical military and space programs, and sophisticated
industrial applications. For more information, visit
Ducommun.com
Forward Looking StatementsThis press release
includes “forward looking statements” within the meaning of the of
the federal securities laws relating to Ducommun Incorporated,
including any statements about its 2027 Vision Strategy and similar
expressions that concern Ducommun’s intentions or beliefs about
future occurrences, expectations, or results. Forward looking
statements are subject to risks, uncertainties and other factors
that may change over time and may cause actual results to differ
materially from those that are expected. It is very difficult to
predict the effect of known factors, and Ducommun cannot anticipate
all factors that could affect actual results that may be important
to an investor. All forward-looking information should be evaluated
in the context of these risks, uncertainties and other factors,
including those factors disclosed under “Risk Factors” in our
reports filed with the Securities and Exchange Commission,
including the Company’s Quarterly Reports on Form 10-Q, Annual
Reports on Form 10-K, and Current Reports on Form 8-K. The
forward-looking statements included in this press release are made
only as of the date of this press release, and Ducommun does not
undertake any obligation to (and expressly disclaims any such
obligation to) update the forward-looking statements to reflect
subsequent events or circumstances.
CONTACTS: Suman Mookerji, Senior Vice
President, Chief Financial Officer, 657.335.3665
Steven Lipin/Lauren Odell, Gladstone Place Partners,
212.230.5930
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