TransDigm’s Strategic Acquisition of CPI’s Electron Device Business: A Novel Move in Aerospace and Defense


The aerospace and defense industry witnessed a significant consolidation with TransDigm Group Incorporated's recent acquisition of the Electron Device Business of Communications & Power Industries (CPI) for $1.39 billion. This move represents a strategic effort by TransDigm to bolster its presence in the high-margin aftermarket segment of the aerospace sector.

Companies and Their Background

TransDigm Group is an Ohio-based leader in the space of aerospace component manufacturing. It's well known for its impressive portfolio of proprietary and high-value products. Effectively, its business model has a track record of focusing on high aftermarket content revenues, which makes it a unique player in the industry.

CPI's Electron Device Business, on the other hand, focuses in a niche-like manner on manufacturing proprietary electronic components and subsystems. Needless to say, its expertise in the aerospace and defense markets, with a significant portion of its revenue coming from aftermarket sales, makes it an asset appealing to have in the portfolio.

Transaction Specifics

The acquisition deal was valued at $1.39 billion. This strategic move was to enhance TransDigm's position in the aerospace and defense industry. TransDigm's CEO, Kevin Stein, underscored the alignment of CPI's business operations with TransDigm's strategic focus on aftermarket content revenues.

Worth mentioning, CPI's Electron Device Business brought in $300 million in revenue for its fiscal year ending September 30, 2023. Approximately 70% of its income is derived from aftermarket sales of proprietary products.

Industry Impact and Analysis

It would be an understatement to label this transaction only financial in nature. In fact, it's a strategic fit for TransDigm. Two reasons. It brings a substantial revenue stream and also strengthens TransDigm's portfolio with CPI's proprietary products. CPI's proprietary products have established positions across various aerospace and defense platforms.

This is effectively a shift in the aerospace and defense industry, putting an emphasis on the importance of aftermarket services and proprietary products.

Future Outlook

The future holds both opportunities and challenges for TransDigm. On one hand, it expanded its operational footprint and enhanced its market presence, especially in the high-margin aftermarket segment. On the other hand, integrating CPI's operations and maintaining product excellence will be a challenging feat for the acquirer.

What to expect from the future and how will this deal "echo" in the industry? Well, for one, increased competition in the aftermarket services sector, and, two, a push towards consolidation of specialized aerospace and defense components and services.

What to Expect Next?

No doubt that TransDigm's deal of acquiring CPI's Electron Device Business was a part of the "bigger picture" aligning with the company's long-term strategic goals. This deal not only underscores the value of aftermarket content in the aerospace and defense industry but also most likely "sets the tone" for future consolidations in this high-tech sector.

Redmount M&A is a strategic partner for aiding companies in the MSP space to achieve their growth and capital restructuring goals. The firm has a track record in helping MSP companies execute transactions, achieve strategic capital restructuring, and in effect, increase the desired long-term market expansion objectives.

Andrej Veskovic
Senior Investment Banking Associate at Redmount M&A and Associate Deputy of Chairman of the Advisory Board at Dimension Investments