Woodward, Hexcel to Hook up

Woodward, Inc. (NASDAQ:WWD) and Hexcel Corporation (NYSE:HXL) announced plans to combine in an all-stock merger of equals.

Woodward is headquartered in Fort Collins, Colorado, while Hexcel is stationed in Stamford, Conn. The combined company, to be named Woodward-Hexcel, will focus on "technology-rich innovations to deliver smarter, cleaner, and safer customer solutions."

The deal means Hexcel shareholders will receive a fixed exchange ratio of 0.625 shares of Woodward common stock for each share of Hexcel common stock, and Woodward shareholders will continue to own the same number of shares of common stock in the combined company as they do immediately prior to the closing.

The exchange ratio is consistent with the 30-day average share prices of both companies. Upon completion of the merger, existing Woodward shareholders will own approximately 55% and existing Hexcel shareholders will own approximately 45% of the combined company on a fully diluted basis.

In connection with the transaction, Woodward is increasing its quarterly cash dividend to $0.28 a share. The merger is expected to be tax free for U.S. federal income tax purposes.

The combined company will be among the top independent aerospace and defense suppliers globally by revenue. It will have more than 16,000 employees, manufacturing operations in 14 countries on five continents, and a diversified customer base across multiple markets.

For each company’s respective fiscal year 2019 on a pro forma basis, the combined company is expected to generate net revenues of approximately $5.3 billion and EBITDA of $1.1 billion, or a 21% EBITDA margin.

Shares in WWD popped $5.59, or 4.6%, to $127.55, while those of HXL hiked $6.84, or 9.4%, to $79.74