Behind the scenes of Boeing's big tech sale
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Illustration: Maura Losch/Axios
Boeing early last year was at yet another low point, after it was revealed that part of an Alaska Airlines plane had blown off mid-flight because of missing bolts.
- That incident may have been the genesis of Boeing's decision to sell most of its digital aviation business to private equity firm Thoma Bravo for $10.55 billion, which was announced Tuesday.
Behind the scenes: Axios has learned that Thoma Bravo soon after sent a letter to Boeing's CEO and CFO, with whom it had existing relationships, suggesting ways that the debt-laden company could raise capital.
- One idea was to sell off profitable tech assets that Boeing had acquired in 2000 (Jeppesen) and 2019 (ForeFlight).
- By Q4, Boeing had hired banks and launched an auction.
Zoom in: There were around three dozen bidders in the initial round, including both financial sponsors and strategics.
- That got whittled to fewer than 10 bidders in the second round, and then down to four — each of which either was a standalone PE firm or PE consortium.
- Final bids were due Monday. Boeing picked Thoma Bravo, which in turn chose private credit over syndicated loans.
The big picture: What's remarkable about the process is that the price is said to have climbed at each stage, despite tariff tumult that's impacted other large mergers and been particularly tough on airlines.
- Delta, for example, recently pulled its 2025 guidance, while United issued two different sets — depending on if the U.S. does or doesn't enter a recession.
- The buyside thesis seems to be that the number of "tails" will keep climbing, even if travel suffers a near-term decline, and that those new planes will require the sort of tech that Boeing is offloading. Particularly as flight automation accelerates.
- Part of this confidence is based on historical growth trends, and part on documented order backlogs.
- Plus, private equity has longstanding affinity for carveouts from legacy OEMs like Boeing.
State of play: Boeing shares rose more than 6% at Wednesday's open, on better-than-expected earnings.
The bottom line: Some big deals can keep flying through the turbulance.
