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Maker of Jet Fasteners Sells for $300 Million

Portland, Ore.-based Precision Castparts Corp. made it an even three in Orange County by announcing a deal to buy Cherry Aerospace LLC in Santa Ana last week.

The $300 million cash buy is set to close during the quarter, the company said.

“Cherry has been one of our top tuck-in targets,” said Mark Donegan, chief executive of Precision Castparts. “Cherry will fill a significant gap.”

Precision looks at acquisitions as “tuck-in targets” if they can be rolled into one of its other businesses.

Cherry, which makes rivets and bolts, is set to become part of Precision’s fastening systems for commercial and military aircraft.

It’s set to be the third fastener business Precision has acquired in OC.

“The idea that we have an Orange County strategy is less valid than to say that we have a fastener strategy,” Precision spokesman Dwight Weber said. “There are three very good properties that are located smack dab in the OC.”

A year ago, Precision wrapped up its $110 million buy of Shur-Lok Group in Irvine. In early 2005, the company paid $194 million to buy Garden Grove’s Air Industries Corp.

Cherry is the former fastener arm of Rhode Island’s Textron Inc. The company, formerly called Textron Fastening Systems Inc. and later part of Acument Global Technologies Inc. of Troy, Mich., was bought in August by private equity investor Platinum Equity LLC of Beverly Hills.

Textron bought what was Cherry Rivet Co. in 1959.

Precision doesn’t plan big changes at Cherry.

“We’ll make an acquisition of something with a brand name, and they will just change their stationery,” Weber said.

Founded in 1939, Cherry employs 500 people at its 286,228-square-foot Santa Ana plant. It’s been at the site since 1951.

Cherry’s products are “respected throughout the aerospace industry and are frequently specified by brand name on customers’ original blueprints,” Donegan said.

Demand for fasteners has grown as Boeing Co. and Airbus SAS have been building planes at record rates.

“The aerospace industry is doing quite well right now, so we would expect Cherry to continue to succeed,” Weber said. “As long as they are building aircraft and engines we stand to benefit.”

Precision sales were $3.5 billion in 2006, up 22% from 2005.

The company doesn’t further break down sales for its fastening systems unit. It employs about 4,800 at the unit and some 16,000 worldwide.

“We’ve been able to make major strides in gaining market share,” through acquisitions, Weber said. “It’s made us grow somewhat faster than just the build rate” of airplanes.

Fasteners are made of nickel or titanium-based alloys that help hold pieces of a plane together. Cherry makes “critical fasteners”,pieces that hold a wing onto the fuselage, the engine onto the wing and bind various structural parts within the plane.

The fasteners are used “wherever you would need strength and have great stress,” Weber said.

About 60% of Precision’s sales in 2006 were from its aerospace businesses.

Along with fasteners, the company makes the skeleton frames and casings for plane engines as well as the blades that make its giant turbines hum. It also makes beams and landing gear.

In the fastening business, the biggest local competition is Alcoa Fastening Systems Inc. in Fullerton, a unit of Pittsburgh-based Alcoa Inc.

Alcoa Fastening makes heavy-duty bolts that hold together the aluminum bodies of airplanes. The company employs about 1,000 workers at its three local plants.

Precision is eyeing more acquisitions, according to Weber.

In the past it targeted companies with yearly sales up to $800 million, he said.

With Precision’s swelling market value,$11 billion at a recent check,the company is set to go after companies with a billion dollars or more in yearly sales, Weber said.

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