VSE Corporation (VSE) has signed a definitive agreement to acquire Kellstrom Aerospace Group (Kellstrom), a portfolio company of AE Industrial Partners, and a diversified global distributor and service provider supporting the commercial aerospace engine aftermarket. The transaction is subject to customary closing conditions, including regulatory review, and is expected to close in the fourth quarter of 2024.
The total consideration for the transaction is approximately US$200 million, consisting of around US$185 million in cash and US$15 million in shares of the company’s common stock, subject to working capital adjustments. The acquisition is expected to be funded by anticipated proceeds from an equity financing and borrowings from VSE’s existing credit facility.
Kellstrom aligns closely with VSE Aviation’s growth strategy by enhancing exposure to the commercial aerospace engine aftermarket, where it combines new customers, distribution products, MRO capabilities, and technical services, driving growth in this rapidly expanding sector. With over 95% of its distribution revenue stemming from long-standing relationships with leading OEMs, Kellstrom supports VSE Aviation’s core OEM-centric strategy. Additionally, approximately 50% of Kellstrom’s revenue comes from outside North America, particularly in the high-growth APAC region. The integration of Kellstrom is expected to create significant synergies, as it complements VSE Aviation’s technical OEM-focused distribution business and enhances the capabilities of the recently acquired Turbine Controls, Inc.
Ben Thomas, President of VSE Aviation, expressed delight at the prospect of welcoming the Kellstrom team to the VSE Aviation family later this year. “Kellstrom’s portfolio of engine-focused products and MRO services, coupled with its technical advisory capabilities and OEM-centric approach, makes this acquisition highly complementary to VSE Aviation’s business. This acquisition is expected to yield significant sales and operating synergies, allowing us to leverage combined strengths, optimize resources, and drive accelerated growth in the aviation aftermarket.”
Oscar Torres, President and CEO of Kellstrom Aerospace, expressed excitement about joining the VSE team. “This combination is expected to significantly expand the products and services we offer our customers around the world. We are confident that by joining forces with VSE Aviation, we will enhance the long-term value we bring to our customers and supplier partners in the commercial aerospace aftermarket.”
