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Jets Parts Company Buys U.K. Business

Brea-based plane parts distributor Kirkhill Aircrafts Parts Co. has bought England’s Avialec International Ltd., a supplier of electrical equipment.

The buy, for which terms weren’t disclosed, comes at an interesting time as the dollar has been losing ground to foreign currencies, particularly the pound and the euro.

“It was the worst possible time from an exchange rate perspective,” said Andrew Todhunter, president and chief operating officer with Kirkhill. “But we really liked the strategic fit.”

Kirkhill wants to expand overseas with new products. Avialec’s operations in Europe and its catalog of electrical plane parts made it a good fit, Todhunter said.

Last year, Kirkhill had $140 million in revenue from distributing and making more than 60,000 types of plane parts for Boeing Co., AMR Corp.’s American Airlines and United Air Lines Inc.

Avialec, based south of London, has 25 workers and does about $12 million in sales.

The company wanted to close the deal in April before an increase in Britain’s capital gains tax took effect.

“The seller wanted to close quickly to avoid a 5% to 10% rise in capital gains tax,” said Manan Shah, who brokered the deal for Washington, D.C.-based investment bank Focus LLC.

Jets increasingly are using more electrical parts like the ones Avialec makes and distributes, Todhunter said.

Bulky hydraulic and pneumatic equipment, used for things such as air conditioning, are being switched out for lighter and more reliable electrical equipment, he said.

The company also hopes the deal will put it a step closer to doing business with Europe’s Airbus SAS, part of European Aeronautic Defense & Space Co.

Avialec already supplies Airbus parts to airlines, but not to the company itself.

Kirkhill is opening an office in the Netherlands to be closer to the Airbus market.

“We’ll keep calling them until we make it,” Todhunter said.

Avialec owner Barrie Prescott is set to stay on as chief executive. No hiring or layoffs are expected from either company.

Being bought by Kirkhill came at the request of one of Avialec’s larger customers, according to Shah.

“(The customer) wanted consolidation because it gave them comfort of financial stability,” Shah said.

The plane parts business is seeing more consolidation partly because customers don’t want to deal with a lot of vendors, according to Shah.

Kirkhill has been on the hunt for small companies to buy to add electronics parts to its business.

In December, it bought Burbank-based HK Aerospace LLC, a distributor of electrical plane parts with $4 million in yearly revenue.

The company also plans to stop leasing out one of its three Brea buildings and use the space to develop parts.

Kirkhill’s main business is distribution, but it also makes gaskets, bushings and other parts at its Brea plant.

Its customers count on Kirkhill to forecast and have ready supplies that can be shipped quickly.

“We’re always ready to ship parts out within four hours,” Todhunter said.

Kirkhill employs 170 in Brea. It also has a warehouse in Essex, Conn.

About 60% of Kirkhill’s business is done in the U.S., where it competes with Springville, Utah-based Wencor West Inc. and Hauppauge, N.Y.-based Seal Dynamics LLC.

Its biggest competitors are Europe’s Avio-Diepen Inc., based in the Netherlands, and Satair AS, based in Denmark.

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