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Key Takeaways
- Spirit AeroSystems shares dropped in pre-market trading Tuesday following reports Boeing changed the terms of its all-cash offer to reacquire the company for a mostly stock deal valuing Spirit at about $35 per share.
- If accepted, that offer would represent a premium of about 6% to Spirit’s closing price Monday of $33.07.
- The deal will reportedly require Spirit to spin off some of its manufacturing plants to Boeing’s European rival Airbus.
- A volume-backed breakout above the neckline of an inverse head and shoulders pattern in Spirit AeroSystems shares at $35 could see the stock climb to overhead resistance around $54.
Spirit AeroSystems (SPR) shares dropped more than 3% in pre-market trading Tuesday after Bloomberg reported late Monday that Boeing (BA) changed the terms of its all-cash offer to reacquire the parts supplier for a mostly stock deal valuing the aerostructure supplier at about $35 per share.
If accepted, the offer of $35 per share would represent a premium of about 6% to Spirit’s $33.07 Monday close and implies 22% upside from the stock’s Feb. 29, close, the day prior to the takeover discussions becoming public.
In addition, the deal will require Spirit to spin off some of its manufacturing plants to Boeing’s European rival Airbus (EADSY), Bloomberg reported. Discussions have faced headwinds in recent months after Airbus threatened to block the deal if it involved Boeing building any of its newest aircraft.
Boeing has said that buying back Spirit, a former subsidiary it sold in 2005, would improve the safety and quality in its plants, after leveling blame at the airframe manufacturer for supplying incomplete or faulty parts to its factories. The embattled plane maker has come under intense scrutiny from federal aviation regulators and lawmakers this year following a door plug of an Alaska Airlines (ALK) 737 Max jet detaching mid-flight in January.
Chart Levels To Watch in Spirit AeroSystems Stock
Taking a look at the weekly chart, Spirit AeroSystems shares broke above a multi-year downtrend line in early March after news of Boeing’s potential takeover of the company emerged.
Since that time, the price initially retraced, but found support from the breakout point and now trades just below the neckline of an inverse head and shoulders pattern, a chart formation that indicates a potential reversal back to the upside.
Looking ahead, investors may monitor for a volume-backed breakout above the pattern’s neckline at $35. Such a move could mark the beginning of a new uptrend and see the stock climb to around $54 where it would likely encounter overhead resistance from a horizontal line that connects a series of price action stretching back to May 2017.
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