Annapolis-based aviation firm Arinc sold for $1.39 billion

Rockwell Collins' $1.39 billion acquisition of Arinc likely will have some impact on the aerospace technology firm's 900 Anne Arundel County employees, but what that might be remained unclear Monday.

Rockwell Collins Inc. announced Sunday that it would buy Annapolis-based Arinc Inc. from the Carlyle Group to diversify and complement its aviation technology business.


Some corporate functions are expected to be consolidated, said Cindy Dietz, a spokeswoman for Rockwell, which is based in Cedar Rapids, Iowa.

"It's really too early to say what that will mean in terms of jobs in any one location," Dietz said.


Such acquisitons typically result in some layoffs or relocations for employees at the headquarters of a company being acquired.

The deal still must be approved by regulators.

In announcing the deal, Rockwell said it will "bring together two leading players in the growing field of aviation information management, combining ARINC's trusted networks and services with the industry leading avionics and cabin technologies developed by Rockwell Collins."

The deal also will reduce Rockwell's dependence on federal spending to less than half of its $4.65 billion in annual sales. Rockwell employs 19,000, while Arinc has about 2,000.

The deal was met Monday by mixed reactions from financial analysts. Some said the acquisition will help Rockwell speed its shift to commercial business as defense spending contracts, but others questioned whether it will present the company with any real cost savings or revenue opportunities.

"We think the network technology is complementary to [Rockwell's] cockpit electronics/avionics for areas like flight planning and airport operations," according to an RBC Capital Markets report released Monday.

Arinc will help Rockwell better balance its government and commercial sales, RBC said in its report.

But Yair Reiner, senior aerospace and defense analyst for Oppenheimer & Co. Inc., questioned the benefits of the deal.

"It's not entirely clear how bringing those two businesses under the same roof will allow either company to take out cost or allow either company to generate new revenue, because fundamentally, the two companies require their own kind of path in terms of developing products and services," Reiner said.

Rockwell's focus on avionics — the electronic control and communications systems aboard aircraft — is an "adjacent market" to Arinc's services, which allow planes to communicate with controllers and others on the the ground. It's not known whether operating in both markets will create synergies, Reiner said.

During a conference call on the acquisition Monday, Kelly Ortberg, Rockwell's new CEO, said the acquisition will allow the company to pair its inflight systems with Arinc's extensive ground-based networks to take advantage of growing demand for interconnectivity between them.

There may be implications for in-flight entertainment options on commercial flights as well, officials said.


"Rockwell Collins' expertise in managing information on-board the aircraft, coupled with our innovative and reliable air to ground communications services, will be instrumental in providing new integrated information management solutions for our customers," said John Belcher, Arinc's chairman and CEO, in a statement.

Through a spokeswoman, Belcher declined to comment Monday on the acquisition, referring all questions to Rockwell.

Belcher and his wife, Cathy, of Edgewater, pledged at least $11 million to Anne Arundel Medical Center earlier this summer in the largest bequest ever made to the hospital. He sits on the hospital's board of trustees and is past chair of its foundation board.

The Carlyle Group, a Washington-based private equity firm, has been trying to sell Arinc, which it acquired from a group of airlines for an undisclosed sum in 2007.

Founded in 1929, Arinc traces its roots to the emergence of commerical aviation, when it was appointed the sole licensee to serve the communications needs of emerging airlines by the Federal Radio Commission, now the Federal Communications Commission.

Today, it provides communications and data services across the field of aviation and in rail, industrial security and public safety. It expects 2013 revenue to top $600 million and has regional headquarters in Singapore and London to serve customers worldwide.

Ortberg declined to discuss how Rockwell will manage Arinc's businesses or whether it will sell off any of them. The rail and industrial security operations are smaller than its aviation business and didn't drive the acquisition, Rockwell executives said.

Arinc was also one of three equipment makers that joined Washington's Metro last year in admitting liability in the June 22, 2009, train crash that killed nine people and left dozens injured. The companies said they did so to avoid the risks and costs of litigating the case. After the crash, Arinc worked with the Metro system to upgrade its control systems to prevent such accidents.

Rockwell officials said they would retain Arinc businesses that contributed to its growth.

Shares of Rockwell, which trade on the New York Stock Exchange, fell $1.09 Monday to close at $73.33.

Reuters contributed to this article.


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