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Bet Shemesh Engines buys Carmel Forge from Pratt & Whitney

Ishay Davidi photo: Eyal Izhar
Ishay Davidi photo: Eyal Izhar
29 Oct, 2018 12:02
שלח תגובה במיילGuy Ben Simon

Carmel Forge will continue to supply parts to Pratt & Whitney under a 10-year, $360 million agreement.

Bet Shemesh Engines Ltd. (TASE: BSEN), controlled by First Mezzanine Investors Opportunity Funds (FIMI), which is headed by Ishay Davidi, today announced an agreement with Pratt & Whitney, a division of United Technologies Corporation, to buy all of the shares in Carmel Forge for $58.5 million. Carmel Forge manufactures parts for aviation jet engines.

As part of the deal, Carmel Forge has signed a long-term agreement (LTA) with the Pratt & Whitney group including production of forged metal alloy components to be used in Pratt & Whitney's new engine manufacturing projects. The agreement is for $360 million over 10 years. Revenue from Carmel Forge's framework agreements will amount to $490 million over 10 years, starting when the deal is completed. Pratt & Whitney and Carmel Forge's combined revenue from the framework orders is estimated at $8.1 billion over 14 years, starting when the deal is completed.

The agreement stipulates that the consideration will be adjusted to the acquired company's cash balances and debt as of the date on which the deal is completed (on a debt-free/cash-free basis), and to the acquired company's working capital on that date, based on the company's average working capital over the past year.

Carmel Forge, an aviation industry company founded in 1961, was acquired by Pratt & Whitney in the 1990s. The company has 225 employees and a plant located in Tirat Hacarmel. It has all of the authorizations needed to produce forged metal alloy components for jet engines. Bet Shemesh Engines is a customer of Carmel Forge, whose products are used as raw material for Bet Shemesh Engines' production of parts. Carmel Forge's customers include companies producing jet engines for aviation, including Bet Shemesh Engines customers such as Pratt & Whitney, Snecma, ITP, and MTU.

Bet Shemesh Engines' notice to investors included Carmel Forge's financial results: a $3 million net profit in the first half of 2018, following net profits of $5.6 million in 2017 and $5.1 million in 2016.

Published by Globes, Israel business news - en.globes.co.il - on October 29, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Ishay Davidi photo: Eyal Izhar
Ishay Davidi photo: Eyal Izhar
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