GE Aerospace to spend nearly $12 billion to bring key castings supplier in-house

Sept 8 — GE Aerospace said on Tuesday it would buy castings supplier Consolidated Precision Products from investment firms Warburg ​Pincus and Berkshire Partners for $11.75 billion, as the aerospace giant seeks to boost in-house manufacturing capacity.

Engine makers are racing to increase output and ease supply-chain risks as strong demand for new aircraft ‌and aftermarket spare parts continues to drive orders.

The acquisition, GE Aerospace's largest since it became a standalone company, brings a major supplier of ⁠precision castings in-house, giving it greater control over ​a critical segment of the jet-engine supply chain.

"Investing ⁠in mission-critical casting capacity is needed to support the strong simultaneous demand across commercial engines, aftermarket and defense," ‌GE Aerospace CEO Larry ‌Culp said.

"By combining GE Aerospace's technology capabilities and flight deck with CPP's manufacturing experience, we ⁠expect to expand capacity, improve performance and accelerate new engine ⁠technologies for the current fleet and next-generation platforms."

The deal comes a few days after SpaceX CEO Elon Musk touted the company's ambitions to manufacture turbine blades to cater to its own power needs.

The investment castings market is in "war games mode", Jefferies analyst Sheila Kahyaoglu said in a note.

GE Aerospace shares were marginally down in morning trading, while smaller rival Howmet Aerospace fell 6%.

VERTICAL INTEGRATION

Engine makers have ‌repeatedly complained about a shortfall of castings, which has weighed on production.

CPP ​is one of the world's largest producers of investment and precision sand castings — metal components formed by pouring molten alloy into highly precise molds — and supplies parts for nearly every major current-generation commercial and military aircraft program, as well as helicopters, weapon systems and industrial gas turbines.

About 70% of CPP's revenue comes from commercial and defense engines, while most of the remainder is generated by missiles and power-generation equipment.

GE Aerospace, which will fund the deal with existing cash and new debt, expects demand for ​airfoils — precision-cast turbine blades and vanes that operate under extreme heat and are central to engine efficiency and durability — to ‌rise more than ‌30% by 2030.

The company ⁠said bringing CPP into the fold would more closely link airfoil design and production, shorten development cycles and improve manufacturing readiness as it ramps output.

The deal, likely to close in the second half of 2027, is expected to boost GE Aerospace's adjusted profit per share and free cash flow in the first year.

GE Aerospace ‌is paying the equivalent of 26 ​times CPP's expected 2027 core profit, excluding anticipated integration benefits. ‌Including those benefits, the deal ⁠values CPP at 18 ​times its projected 2027 EBITDA, or earnings before interest, taxes, depreciation and amortization.

(Reporting by Shivansh Tiwary in Bengaluru; Editing ​by Shilpi Majumdar)

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