Details on the Sale of Continental Motors
Dec 14th, 2010
What are the facts of this deal?
• Teledyne has signed an agreement to sell its wholly-owned subsidiaries, Teledyne Continental Motors, Inc. and Teledyne Mattituck Services, Inc. to AVIC International for $192 million in cash.
• AVIC International Holding Corporation, headquartered in Beijing, China, is a multinational commercial business with 60 international offices whose businesses operate in world aviation, commercial aircraft sales and service and many other areas.
• Continental Motors is an FAA-certified manufacturer of piston aircraft engines and spare parts with its own fabrication, machining, assembly, and testing operations. The unit employs approximately 400 people, is headquartered in Mobile, and is an important part of the Gulf Coast business community.
• Mattituck Services is an aftermarket supplier and over-hauler of piston engines to the general aviation marketplace. The unit employs approximately 30 people and is located in Mattituck, New York. Upon the closing of the transaction, Mattituck Services will continue to operate under Continental Motors.
We anticipate closing in the 1st Quarter of 2011.
Why is Teledyne selling Continental Motors?
• Because 90% of Teledyne’s business is electronics and engineering, AVIC International is a much better strategic fit for Continental Motors. Teledyne would not be doing this deal if the management didn't think it was the right long-term solution for the company, its workforce and the Mobile community.
Why is Teledyne selling Continental to AVIC International instead of a U.S. company?
• AVIC International offers the best strategic opportunity for Continental Motors. At the moment, there are approximately 900 general aviation aircraft operating in China compared to approximately 240,000 in the United States. The current and future products of Continental Motors, coupled with the global experience of AVIC International, offers immense growth opportunities in many regions of the world.
Will AVIC International be making any additional investments in Continental Motors?
• With the acquisition of Continental Motors, AVIC International is making a major financial commitment to the Mobile region. Furthermore, the transaction sets the stage for new hires of skilled workers in Mobile, as international demand for piston-powered aircraft would result in increased engine manufacturing at Continental Motors. AVIC International also plans continued investment and upgrades in Continental Motor’s operations, as well as increased research and new product development.
Will AVIC International move the Continental Motors facilities to China?
• AVIC International has a strong incentive to keep operations in Mobile as all Continental Motors facilities are FAA-certified, and those certifications would be lost if the facilities are moved to China. FAA certification is the gold standard in global aviation: It is required in the U.S. market and is in high demand for aircraft sold internationally.
• AVIC International intends to maintain Continental’s global headquarters in Mobile.
• Roughly 90% of Continental’s current annual sales base is in North America and Europe, therefore it makes no sense to move the facility to another country.
Will future Continental Motors engines and parts be exported abroad?
• After the acquisition, Continental Motors will continue selling products to both domestic and foreign buyers as it does today.
Will the name of Continental Motors change?
• The Continental Motors name will be retained. The company’s unique reputation for product quality, safety and service are valuable to AVIC International.
Will U.S. employees be laid off?
• AVIC International plans to maintain the companies’ operational facilities, management, and workforce in the U.S.
• As of now, this deal will not result in any change in staffing. As Continental has done historically, future staffing (more or less) will depend on the balance between global growth vs. economic challenges.
• With the ability to reach new markets and the investment AVIC International is making in the facility we hope to grow employment in the future.
Will the employees lose their benefits?
• AVIC International and Continental Motors are committed to honoring the requirements of our Union Contract. Teledyne retains and will honor all vested benefits in accordance with benefits guidelines for all current and retired employees of Continental Motors.
• Continental Motors will continue to offer a competitive health care plan and other benefits. During the transition period, we plan on interviewing and assessing plans to offer our employees beginning on the date of closing.
Will you make the Purchase Agreement public so we can all see what is in it and verify whether what you say is true? Why not?
• A brief presentation summarizing the proposed transaction and growth opportunities will be posted to Continental Motors’ website at www.genuinecontinental.aero.
• Teledyne will comply with all disclosure requirements. Many parties in the aviation industry do not make public the specific terms of their agreements for proprietary and competitive reasons. However, we have made public a significant amount of information about this transaction to ensure an accurate understanding of the deal.