CAE Inc. has struck a deal with U.S. aerospace and defence giant Lockheed Martin Corp. to acquire its commercial flight training unit.
Montreal-based CAE, a leading flight crew trainer and simulator manufacturer, said on Monday the conditional agreement with Lockheed Martin will help expand its business for commercial flight simulators as well as result in the acquisition of assets such as full-flight simulators, simulator parts and equipment, facilities, technology and a skilled work force.
No financial or other details of the transaction were disclosed.
Lockheed Martin decided to get into the flight simulation business in 2011, when it bought Dutch company Sim-Industries and later changed the name to Lockheed Martin Commercial Flight Training (LMCFT).
Among the aircraft LMCFT provides pilot training for are the Boeing 737 and Airbus 320.
"We look forward to servicing an expanded customer installed base with this relatively small bolt-on acquisition and view positively the opportunity to pick up certain useful assets and to create synergies with our existing business," CAE president and chief executive officer Marc Parent said.
CAE is betting on strong demand for pilot training in civil aviation over the next several years as global air traffic grows.
The company also has a significant presence in simulators and training on the military side and is active in the medical simulation segment as well.
"We expect the news to be well received and in line with the company's strategy of expanding in the training services market," AltaCorp Capital Inc. analyst Chris Murray said in a note to clients on Monday.
BMO Nesbitt Burns analyst Fadi Chamoun said in a note that the "biggest positive here is perhaps that LMCFT is exiting the business, which we understand had struggled to grow profitably over the past several years and has, over time, been a source of pressure on CAE's margins."
The assets being purchased are an opportunity for CAE to expand in its core market "at low incremental capital costs," he said.