More Clues (and Mystery) about Textron Deal

In an interview yesterday Textron CEO Lewis Campbell failed to dispel clearly the questions surrounding Textron's future and in particular, its rumored sale to a consortium of UAE investors.

Campbell at one point said it was "highly unlikely" they'd need to sell either Bell or Cessna:

Given the success we have had with the Textron Financial liquidation so far, and given the recent sale of two high-value assets and other cash-production opportunities, I feel now that it’s highly, highly improbable and unlikely that we’ll ever have to divest any more assets.

But have these 'cash production opportunities' (read: desperate sell-offs) really produced enough cash? "It sold its Fluid & Power unit in November and HR Textron in March, generating about $615 million after taxes." Sounds good, but Textron has over $6B in debt coming due over the next 2 years. Good luck refinancing that while you are divesting your cash-flow positive assets in the meantime.

Israel Worried About Textron Deal

The Jerusalem Post reports that members of Israel's defense establishment are concerned about the implications of a potential sale of Textron to a UAE consortium.

"This is not simple for Israel," explained one defense official. "There are many projects that we develop together and if the company is bought, then a lot of classified information will be exposed."

Previous reports were that the unnamed UAE buyers would take only the commercial assets of Textron and spin off its defense business (to United Tech?). 

The concern here seems a bit weak. Wonder if they have noticed the entire defense industry trying to sell to Israel's neighbors over the last few years.

No Comment Yet From Textron

Textron management has yet to comment on reported speculation about a takeover by an unnamned UAE investor and potential spin-off of its defense business. Investors respond to the uncertaintly by cutting the stock 10% yesterday, and analysts have started downgrading. See details here.

UAE Buyer for Textron?

From Bloomberg, a Kuwaiti newspaper has reported that a "United Arab Emirates group" is preparing to purchase Textron Inc. (TXT). It's unclear right now who this investor might be, and major UAE investment groups, including Aabar Investments PJSC, have stated that they are not involved. To make matters even more intriguing, it seems the mystery investor will likely want only the commercial assets of Textron, spinning of its defense units to parties that may be already involved in the deal. United Technologies would be an obvious bidder for the Bell Helicopter division, as would most other large primes for their systems business.

It will be interesting to see how this deal -- if it's legit -- will play out politically.