Boeing suppliers Hexcel and Woodward scrap merger as coronavirus hits demand

(Reuters) – Boeing Co (BA.N) suppliers Hexcel Corp (HXL.N) and Woodward Inc (WWD.O) on Monday called off their planned all-stock merger as widespread travel bans to curb the coronavirus pummels demand in the aerospace sector.

The companies, which make and supply aircraft parts, had agreed to a merger in January in a $6.4 billion deal.

“Although we are disappointed with this outcome, we are confident this is the right decision for our customers, our shareholders, and our employees,” the companies said in a joint statement.

The market rout triggered by the coronavirus pandemic and the resulting economic downturn has thrown a wrench into corporate deal making. Last month U.S. printer maker Xerox Holdings Corp (XRX.N) walked away from its $35 billion hostile cash-and-stock bid for HP Inc (HPQ.N).

Boeing, which halted the production of its grounded 737 MAX aircraft in January, said on Sunday it would extend the suspension of production at its Washington state facilities until further notice.

Boeing is Hexcel’s second-biggest customer, accounting for a quarter of the company’s annual sales. Hexcel also supplies Airbus SE (AIR.PA).

Woodward gets about 15% of its annual sales from Boeing, its biggest customer.

Reporting by Ankit Ajmera in Bengaluru; Editing by Shounak Dasgupta and Devika Syamnath

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