TransDigm: The Acquisition of Aerosonic Corp.

By: Daniel Fisher and Benjamin C. Esty

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Synopsis: In April 2013, TransDigm, a company that manufactured a wide range of highly engineered aerospace parts for both military and commercial aircraft, announced an agreement to acquire Aerosonic Corporation for $39 million in cash (1.2 times Aerosonic's sales of $31 million). Having acquired more than 40 companies in the past 20 years, TransDigm was an experienced acquirer with a unique business model focused exclusively on value creation. This case describes TransDigm's acquisition process with a focus on the merger negotiations and the key contractual terms in the merger agreement (break-up fees, go shop period, standstill provision, top-up options, etc.). It serves as a complement to the TransDigm in 2017 case (HBS #720-422). Whereas the TransDigm case provides an overview of the company, its history, its value creation strategy, and its financial performance, the Aerosonic case provides a deep dive into a single transaction as a way to illustrate TransDigm's acquisition-driven growth strategy and to practice valuing an acquisition offer using multiple methods. Ultimately, the goal is to understand the change in value from a standalone company to a fully integrated and value-enhanced subsidiary of the TransDigm Group.