(Bloomberg) -- Boeing Co. is in talks to acquire KLX Inc., the Wall Street Journal reported, as the world’s largest planemaker seeks to ramp up a new division providing maintenance, spare parts and other services to airlines.
An agreement may come as soon as Monday, though a deal could still be derailed, the Journal said, citing people familiar with the matter. KLX, which surged on the report, is a distributor of spare aircraft parts and oil and gas equipment, and had a market value of $3.7 billion as of Thursday’s close.
A deal would further Boeing’s biggest acquisition spree since its 1997 merger with McDonnell Douglas Corp. and boost Chief Executive Officer Dennis Muilenburg’s efforts to more than triple sales at its services business to $50 billion within a decade. Boeing has held preliminary talks with partsmaker Woodward Inc. and is deep into talks to form a joint venture that would give it control of Embraer SA’s commercial jets.
KLX, which was spun out of B/E Aerospace Inc. in 2014 amid pressure from shareholder activists, got about 90 percent of its $1.49 billion in sales from aircraft parts and aftermarket services in its most recent fiscal year. The remainder came from the business catering to oil and gas drillers. Revenue in the energy services division has tumbled 60 percent to $153.2 million since the separation, according to Bloomberg data.
Speculation of a possible tie-up with Boeing has swirled since KLX said in December that it was reviewing options that included a sale. Boeing approached the aerospace partsmaker last year before the strategic review, DealReporter said in an account earlier this year.
KLX would add about $500 million in distribution sales to Boeing’s Aviall parts subsidiary, which generates about 40 percent of Boeing Global Service’s annual revenue, said Ken Herbert, an analyst at Canaccord Genuity. Boeing would add between $1 billion and $1.5 billion to its annual services sales if it pulled off a separate deal with Embraer, the third-largest global planemaker that’s best-known for its regional jets, Herbert wrote in a Jan. 8 report.
KLX, based in Wellington, Florida, climbed 8.8 percent to $79.84 at 3:13 p.m. in New York after advancing as much as 12 percent for its biggest intraday gain on record. Boeing fell less than 1 percent to $341.27.
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