Stanley Black & Decker Divests Aerospace Unit to Howmet for $1.8 Billion Amid Portfolio Refocus

Howmet Aerospace (HWM), a leader in advanced engineered solutions for aerospace, views CAM as a transformative bolt-on. The acquisition expands Howmet’s **engineered structures portfolio**, particularly in jet engine components and aftermarket services, where demand surges from single-aisle production ramps and defense spending. Analysts at Jefferies project the deal to be **2% accretive to Howmet’s 2026 EPS**, driven by synergies in manufacturing scale and customer overlap with OEMs like GE and Pratt & Whitney.[1][5]

Financial Terms and Market Reaction

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Markets responded positively: SWK shares rose sharply on December 22, reflecting investor approval of the value-unlocking move, while HWM benefited from optimism around **aerospace M&A consolidation** in fasteners—a sector with resilient 8-10% CAGR through 2030 per McKinsey aerospace outlooks.[7]

Industry Context and Broader Implications

This deal underscores **aerospace supply chain M&A trends 2025**, where Tier 1 suppliers like Howmet pursue vertical integration amid aircraft backlogs exceeding 17,000 units (Boeing and Airbus combined). CAM’s fasteners are vital for next-gen engines like LEAP and GTF, aligning with Howmet’s “compounding through engine exposure” strategy.[1][3] Bain & Company notes such acquisitions mitigate supply bottlenecks, with aftermarket services offering 20-30% higher margins than OEM parts.

For SWK, it mirrors **corporate carve-out strategies** seen in peers like 3M and Honeywell, which have shed non-core assets to counter cyclical pressures in industrials. Regulatory hurdles appear minimal, given antitrust clearance precedents in aerospace fasteners (e.g., TransDigm’s roll-ups).[6]

• Synergies: Howmet gains CAM’s 1,200+ employees and facilities, enhancing capacity for **cross-border aerospace supply chain** demands.
• Risks: Integration costs and execution, though offset by cash deal structure.
• Comps: Similar to Precision Castparts’ fastener deals (pre-Berkshire) and Arconic spin-offs, valuing CAM at ~12-15x EBITDA.

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Leadership Perspectives and Outlook

Howmet CEO John Plant emphasized CAM’s “strategic fit” for long-term growth, while SWK’s Donald Allan highlighted proceeds fueling **shareholder returns in core businesses**. As 2026 unfolds, expect heightened **PE interest in aerospace carve-outs**, with KKR and Carlyle eyeing similar industrials plays amid elevated valuations (EV/EBITDA ~14x sector avg.).[1][3]