GE Aerospace has agreed to buy Consolidated Precision Products for close to $12 billion, its largest deal since becoming an independent company in 2024. The purchase brings a key casting supplier in-house even as GE Aerospace shares have pulled back since the announcement.
GE Aerospace announced plans on Sept. 8 to acquire Consolidated Precision Products for nearly $12 billion, a transaction the company describes as its largest since it split off as an independent company in 2024. GE Aerospace stock has pulled back by around 4.5% since the deal was announced.
Buying a supplier in a tight market
Consolidated Precision Products, known as CPP, is based in Cleveland, Ohio, and has specialized in aerospace and defense castings and sub-assemblies for over 35 years. Private equity firms Warburg Pincus and Berkshire Partners currently own the company. Only four firms dominate the casting space: CPP, Berkshire Hathaway-owned Precision Castparts, Howmet Aerospace, and U.K.-based DPC Holdings, so GE Aerospace is already a major CPP customer.
Because of this, the deal brings precision casting in-house for GE Aerospace. SpaceX CEO Elon Musk has said he wants his company to enter the turbine blade casting business because of supply bottlenecks, a sign of how constrained the space has become for buyers outside the deal. According to GE Aerospace's acquisition press release, quoting CEO Lawrence Culp, Jr.: "expand capacity, improve performance and accelerate new engine technologies".
A premium price, but accretive to earnings
GE Aerospace is financing the purchase mostly with cash on hand, with around $4.75 billion coming from debt. The transaction is valued at 26 times CPP's estimated 2027 EBITDA, though factoring in cost synergies brings the effective multiple down to around 18 times.
Shares already trade at 35 times forward earnings and an enterprise value-to-EBITDA ratio of 27, a premium the company's market cap of roughly $339 billion already reflects. Management has said the deal will be immediately accretive to earnings, and the transaction could help GE Aerospace gain a supply chain edge over the competition.
Source: The Motley Fool
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