Heroux-Devtek selling part of firm to American company

Prime Minister Stephen Harper was at Heroux-Devtek on Jan. 14, 2011. THE CANADIAN PRESS/Ryan Remiorz

MONTREAL -- Quebec aerospace manufacturer Heroux-Devtek Inc. (TSX:HRX) is selling about one-third of its business to an American company for $300 million in cash -- a deal that sent the Montreal-area company's stock soaring to an all-time high.

Heroux-Devtek stock jumped $3.41 or 44 per cent to $11.26 minutes after the Toronto Stock Exchange opened, beating a record high of $10 per share set at the end of 2001.

The buyer is Precision Castparts Corp. (NYSE:PCP), a worldwide manufacturer headquartered in Oregon that focuses on the aerospace, power and general industrial markets.

It will acquire the Montreal-area company's Aerostructure and Industrial Products division, which accounted for about $130 million of annual sales in the latest financial year -- about one-third of total revenue.

The deal affects locations in Dorval, Mexico, Texas and Ohio that employ about 440 people in total.

Heroux-Devtek, based in Longueuil, says it will keep all of its landing gear business, including design engineering and manufacturing.

After the sale, Heroux-Devtek will have more than 1,000 employees in Canada and the United States with about $250 million of annual revenue -- about two-thirds of the company's revenue before the sale.

Heroux-Devtek president and CEO Gilles Labbe said the transaction will generate significant value for the company's shareholders and provide it with the strength to grow its remaining business and make acquisitions.

"Several exciting growth opportunities are available to Heroux-Devtek and our stronger financial position following this transaction will position us favourably to further expand our landing gear market penetration. Our vision continues to build the corporation into a Quebec-based, world-class organization in this core market," Labbe said in the company's announcement Tuesday.