Cedar Rapids-based Rockwell Collins is set to buy Aeronautical Radio Incorporated, or ARINC in a $1.4-billion deal that financial journals are calling the largest transaction in the North American aerospace and defense industry this year. Kelly Ortberg took over as Rockwell’s CEO just two weeks ago and says acquiring the Annapolis, Maryland-based ARINC is certainly the biggest deal Rockwell has undertaken.
“And this becomes an additional new plat form for growth for the company to expand,” Ortwell says. Ortberg says ARINC provides ground-based communications systems, while Rockwell Collins provides the cockpit communications in the plane.
“The equipment on the airplane communicates with the equipment on the ground and it’s a very secure communication, so that there can’t be any challenges with the information that’s exchanged between the two parties,” he says. Ortberg says the acquisition of the transport communications company will change Rockwell’s balance between the commercial and defense sides of its business.
He says the company will focus more on the commercial sector following the federal budge cuts. “We’re down this year in our top line revenues, we’re expecting that we’ll be down again next year and as I said, stabilize in 2015,” according to Ortberg.
“The acquisition of AIRINC is a nice bridge for us as we’re going through that market cycle. But remember, that defense isn’t going away, and we’ll see return in defense market once we get through this cycle.” The deal is subject to regulatory approval.
If the purchase is approved, 54-percent of Rockwell’s business will be commercial.