Boeing buys parts maker for $1.7b

CHICAGO -- Boeing Co. disclosed its biggest acquisition in nearly a decade yesterday, agreeing to acquire aviation parts and services company Aviall Inc. for $1.7 billion in a deal aimed at increasing its already large stakes in commercial and military aviation markets.

The transaction was the first under chairman and chief executive Jim McNerney and was revealed shortly before the company's annual shareholders meeting.

''The aviation services market offers us tremendous opportunities to profitably grow our business, internally and externally, to better serve our commercial and military customers," McNerney said in a statement.

If the deal is approved by regulators, Aviall will become a wholly owned subsidiary reporting to Boeing's commercial aviation services unit. Aviall is based in Dallas and has about 1,000 employees.

Boeing agreed to pay $48 a share for Aviall, a 27.3 percent premium to Aviall's closing price of $37.70 on Friday. It also will assume $350 million in debt.

Aviall shares leaped $9.26, or 25 percent, to close at $46.96.Boeing shares rose 41 cents to finish at $83.86, one week after hitting a record high of $87.25.

Boeing said the acquisition, which is anticipated to close by the end of the third quarter, is expected to boost earnings modestly in 2007 and have no effect this year.

Aviall's businesses include global parts distribution and supply chain services for aerospace, defense, and marine industries. Its 2005 revenue totaled $1.3 billion, and Boeing said it expects 25 percent growth in 2006.