Boeing (NYSE:BA) has agreed to acquire Spirit AeroSystems (NYSE:SPR) in an all-stock deal worth $4.7 billion, or $37.25 per share. The total value of the acquisition, including Spirit’s debt, amounts to about $8.3 billion. By acquiring Spirit, Boeing aims to enhance control over production quality and safety.
The deal is expected to be completed by mid-2025.
Spirit’s Manufacturing Issues: A Key Reason
This acquisition comes as Spirit, a former Boeing subsidiary and supplier of critical parts for the 737 and 787 aircraft, faces ongoing quality issues. It’s important to highlight that the defective parts from Spirit have led to delays in Boeing’s aircraft deliveries.
Importantly, a fuselage from one of Spirit’s factories was a key factor in the January Alaska Airlines (ALK) door plug blowout. Investigations showed that Boeing workers failed to reinstall bolts during a repair, leading to the mid-air door-plug incident.
Boeing Faces Legal Crossroads
In a recent legal development, Boeing’s troubles are expected to intensify. U.S. regulators are planning to present Boeing with two options: either plead guilty to a charge related to two fatal crashes of 737 Max planes, or contest the fraud-conspiracy charge in court by the end of this week.
If Boeing pleads guilty, it will need to hire an outside consultant to monitor its compliance with safety regulations. Also, BA will have to pay a corporate penalty of about $243 million.
Thus, it remains to be seen what legal actions Boeing will pursue in the future.
Is BA a Good Buy Right Now?
With 16 Buy, five Hold, and two Sell recommendations, BA has a Moderate Buy consensus rating. The analysts’ average price target for Boeing stock of $211.30 implies 16.09% upside potential over the next 12 months. Shares of the company have declined by about 30.2% so far this year.
