Thursday, September 11, 2008

Textron to sell Fluid & Power unit for up to $645M

By Mass High Tech Staff

Textron Inc., a Providence, R.I.-based defense and aerospace conglomerate, reports it is getting out of the pump and transmission business, with plans to sell its Fluid & Power business unit to Clyde Blowers Ltd., a U.K.-based maker of power, materials handling and pump technologies, for up to approximately $645 million.

Textron (NYSE: TXT) will get approximately $526 million in cash, a six-year note worth $28 million, up to $50 million based on final 2008 operating results primarily payable in a six-year note, and Clyde Blowers will assume about $41 million of certain employee-benefit liabilities.

Included in the deal is the sale of all four of Textron Fluid & Power product lines — Gear Technologies, Hydraulics, Maag Pump Systems, Union Pump and each of their respective brands. The sale is expected to close by the end of the year, pending regulatory reviews and approvals, and is subject to certain closing conditions and completion of Clyde Blowers’ funding, officials said.

Textron’s Fluid & Power is part of its Industrial segment and is projected to generate about $675 million this year. The sale is expected to generate an after-tax gain of about $85 million.

In July, Textron announced plans to repurchase $500 million worth of its common stock in the second half of the year. Since the beginning of 2008, the company has bought 3.5 million of its shares for about $190 million. Last year, the company’s board of directors had approved a buyback of 24 million shares.

Last year, Textron acquired United Industrial Corp., a Maryland company that made unmanned aircraft systems, aviation ground support systems and armored vehicles for the defense and aerospace industries, for $1.1 billion.

Textron, known for its aircraft brands Bell Helicopter and Cessna Aircraft, reported a 2007 net income of $917 million on revenue of $13.2 billion.