TransDigm Agrees to Buy Servotronics for $110M, Expands Portfolio

TransDigm Group, Inc. TDG revealed that it signed a definitive merger agreement with Servotronics, Inc., resulting in the latter becoming an indirect, fully-owned subsidiary of TransDigm. The transaction is worth nearly $110 million in cash, including certain tax benefits.The cash consideration reflects a 274% premium over Servotronics' closing share price on May 16, 2025.How Will the Merger Benefit TransDigm Stock?Servotronics serves the global aerospace and defense industry through the supply of its servo valves, which play a key role in supporting the manufacturing of commercial airplanes and business jets. It also provides essential components for various defense applications.With Servotronics holding long-term contracts with prime defense contractors of the U.S. Government for military programs and original equipment manufacturers (OEM) for commercial programs, its acquisition should help TDG expand its customer base, product offerings and market share in both the commercial aerospace OEM and defense industries. This, in turn, should bolster TransDigm’s revenue generation prospects, profitability and operational efficiency in the coming quarters.Considering the fact that a significant portion of Servotronics’ sales is tied to aftermarket services within the commercial aerospace sector, this merger aligns with TransDigm's long-term strategy of acquiring highly developed components with strong aftermarket demand.Acquisition Spree Among Aerospace Defense PlayersThe aerospace and defense industry has been witnessing a significant increasein mergers and acquisitions lately due to several factors like cost-reduction goals, portfolio diversification, achieving economies of scale, and enhancing operational efficiency for long-term growth. Through these transactions, industry players aim to strengthen their position in high-margin aftermarket services, tackle increasing performance and pricing demands from OEMs, and change geopolitical dynamics and heightened industry competition.TransDigm’s latest decision to acquire Servotronics seems to have been motivated by some or all of the aforementioned factors.Other aerospace-defense companies that have recently indulged in acquisition deals are as follows.In January 2025, Curtiss-Wright Corporation CW announced the acquisition of Ultra Energy for $200 million in cash. The buyout should expand Curtiss-Wright’s portfolio with highly complementary, crucial measurement and control solutions for upgrading current commercial nuclear power plants and designing new and advanced power plants, such as compact modular reactors.CW has a long-term (three to five years) earnings growth rate of 12%. The Zacks Consensus Estimate for its 2025 sales implies an improvement of 8.3%.In February 2025, HEICO Corporation HEI declared that its Flight Support Group acquired 90% of Millennium International, a leader in providing business and regional jet avionics repair solutions.HEI has a long-term earnings growth rate of 17%. The Zacks Consensus Estimate for its fiscal 2025 sales implies an improvement of 11.4%.In February 2025, Teledyne Technologies, Inc. TDY announced that it completed the acquisition of some selected aerospace and defense electronics businesses from Excelitas Technologies Corp. for nearly $710 million.TDY has a long-term earnings growth rate of 9.9%. The Zacks Consensus Estimate for its 2025 sales implies a year-over-year improvement of 6.2%.TDG Stock Price MovementIn the past six months, shares of TransDigm have gained 11.7% compared with the industry’s growth of 1.3%. Image Source: Zacks Investment Research TransDigm’s Zacks RankTDG currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Transdigm Group Incorporated (TDG): Free Stock Analysis Report Teledyne Technologies Incorporated (TDY): Free Stock Analysis Report Curtiss-Wright Corporation (CW): Free Stock Analysis Report Heico Corporation (HEI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks