Pratt and Whitney Sells Israeli Carmel Forge Facility (US)

Bet Shemesh Engines signed an agreement to buy Pratt and Whitney-owned jet parts manufacturer Carmel Forge for $ 58.5 million.  Carmel Forge will continue to supply parts to Pratt & Whitney under a 10-year, $360 million agreement.

Israeli engine part manufacturer Bet Shemesh Motors has signed an agreement to acquire Israeli Carmel Forge from American aerospace manufacturer Pratt & Whitney Company Inc., the former announced in a Tel Aviv Stock Exchange filing Sunday. According to the terms of the transaction, Carmel Forge will sign a framework agreement for the supply of parts to the Pratt & Whitney Group over a period of ten years for an estimated total of $362 million. Carmel Forge produces jet engine parts and its products are the main raw material for the operations of Beit Shemesh Engines. Originally founded in 1961, Carmel Forge was acquired in the 1990s by Pratt & Whitney, its largest customer. The Israeli manufacturer employs 225 employees and owns a 527,000 square feet plant northern Israel.

As part of the deal, Carmel Forge has signed a long-term agreement (LTA) with the Pratt & Whitney group including production of forged metal alloy components to be used in Pratt & Whitney’s new engine manufacturing projects. The agreement is for $360 million over 10 years. Revenue from Carmel Forge’s framework agreements will amount to $490 million over 10 years, starting when the deal is completed. Pratt & Whitney and Carmel Forge’s combined revenue from the framework orders is estimated at $8.1 billion over 14 years, starting when the deal is completed.

The agreement stipulates that the consideration will be adjusted to the acquired company’s cash balances and debt as of the date on which the deal is completed (on a debt-free/cash-free basis), and to the acquired company’s working capital on that date, based on the company’s average working capital over the past year.

Carmel Forge, an aviation industry company founded in 1961, was acquired by Pratt & Whitney in the 1990s. The company has 225 employees and a plant located in Tirat Hacarmel. It has all of the authorizations needed to produce forged metal alloy components for jet engines. Bet Shemesh Engines is a customer of Carmel Forge, whose products are used as raw material for Bet Shemesh Engines’ production of parts. Carmel Forge’s customers include companies producing jet engines for aviation, including Bet Shemesh Engines customers such as Pratt & Whitney, Snecma, ITP, and MTU.

Bet Shemesh Engines’ notice to investors included Carmel Forge’s financial results: a $3 million net profit in the first half of 2018, following net profits of $5.6 million in 2017 and $5.1 million in 2016.


Posted in Merger & Acquisition.

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