Story ID: GPhexcelmerger04062020
Hexcel-Woodward Merger Called Off
By: Gregory Polek
Caption: Deteriorating market conditions due to the Covid-19 crisis prompted Hexcel and Woodward to terminate their merger agreement. 
Word Count: 352
Major Boeing suppliers Hexcel and Woodward have called off their planned merger amid deteriorating market conditions caused by the spread of the Covid-19 virus, the companies announced Monday. The companies announced on January 12 an agreement to combine in an all-stock transaction. However, the pandemic has resulted in a need for each company to concentrate on its respective businesses and has affected their ability to realize the benefits of the merger, they said in a joint statement.

“While we both believed from the outset, and continue to believe, in the benefits of a combined Woodward and Hexcel, we mutually concluded after careful consideration that given the significant uncertainty in the market, it would not be prudent to continue to pursue the combination and integration of our companies in a merger of equals,” said Woodward CEO Tom Gendron and Hexcel CEO Nick Stanage in a joint statement. “Although we are disappointed with this outcome, we are confident this is the right decision for our customers, our shareholders, and our employees as it allows each of us to dedicate our focus and resources toward ensuring Woodward and Hexcel each remain strong and closely connected with our customers and supply chains during these unparalleled times. We continue to be hopeful that our two companies will find opportunities to collaborate on next-generation platforms in the future for the benefit of our customers.”

Composites supplier Hexcel provides the material for both the Boeing 787 and Airbus A350. Deriving some 25 percent of its revenue from Boeing, Hexcel makes acoustic inner barrels for 737 Max engine nacelles using its engineered core and the company’s noise-reducing Acousti-Cap technology, in which a permeable cap material gets individually embedded into each honeycomb cell to create an acoustic septum (a cap for the cell made with acoustic materials).

Fort Collins, Colorado-based Woodward derives some 15 percent of its annual revenue from Boeing. It makes control system components for the aerospace and industrial markets. As a result of the Boeing merger termination, Gendron, 59, has decided not to retire a year after the execution of the combination as previously planned.