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Summary
- CAE stocks (TSX:CAE) rise over 82 per cent on the back of the company’s lucrative deals.
- Global fund manager CDPQ reinvestment of C$475 million in the Montréal-based company.
- CAE to acquire US training and simulation business L3Harris Technologies for US$1.05 billion.
The stock of Canadian defense, security, and civil aviation company CAE Inc. (TSX:CAE) is back with a bang as investors, impressed by its performance and growth potential on the back of the company’s several recent lucrative business deals, make a dash to stock up the prized scrips.
The stock has seen unprecedented growth in recent months. It rose 20 per cent in the last 90 days, and more than 82 per cent, in the past six months. It was priced at C$37.98 at 11:13 am ET on Monday, which was an increase of 12 per cent from the previous close.
Global fund manager CDPQ’s reinvestment of CA$475 million in the Montréal-based company has come as a boon since it has caught the attention of many small investors looking to rotate their growth stocks, post the fourth-quarter earnings season.
The cash flow will enable CAE to acquire the American defense training and simulation business L3Harris Technologies as it reinforces its leadership position in the defense, security, and aviation sectors. The GIC Private Limited is another partner in the deal.
Pic Credit: Pixabay.
CAE’s L3Harris Acquisition
With the latest investment in CAE, the CDPQ now becomes its largest shareholder. CAE plans to acquire the L3Harris Technologies' for US$1.05 billion, which is expected to complement the company’s military training business as well as help expand its training and simulation products.
L3Harris’ expertise in training systems for fighter jets, submersibles, and drone technologies would help CAE to consolidate its position as a leading solutions provider for land, naval, space, and cyber operations.
According to an estimate, the offer price for L3Harris is about 13.5 times its adjusted 2020 EBITDA.
CAE has a market cap of C$10 billion. Its products include multiple-type simulators and exercise modules that are sold to clients in different parts of the globe.
The company said that over 60 percent of its revenue is recurring in nature, backed by high-technology and digital transformations across different platforms.
