VSE Accelerates Aftermarket Acquisition Spree With PAG Purchase

Consolidation in the U.S. aftermarket continues apace following VSE Corporation’s agreement to buy Atlanta-based MRO provider Precision Aviation Group (PAG) for a little over $2 billion.

 

The acquisition is the latest in an intense spending spree that has seen VSE also scoop up Turbine Controls, Kellstrom, Turbine Weld Industries and Aero3 within the last two years.

 

However, the deal for PAG is worth more than the previous four put together, with the target expected to roughly double VSE’s global footprint. PAG operates from 29 worldwide locations that specialize in component, engine and avionics services. The company also offers Designated Engineering Representative (DER) repairs and reverse engineering of alternative parts.

 

“We have long admired PAG and view it as an exceptional strategic fit within the VSE portfolio,” VSE CEO John Cuomo said Jan. 29.

 

“PAG adds a differentiated parts and services model, new and highly complementary capabilities, a best-in-class sales organization, a scaled MRO footprint, deep technical expertise, and strong customer and supplier relationships across growing commercial, [business and general aviation], rotorcraft and defense end markets.”

 

Last year, in research for Aviation Week, Accenture noted that component MRO was a strong candidate for further consolidation, as streamlining fragmented repair networks boosts operational efficiency and gives OEM-independent players better access to used serviceable material.

 

“Additionally, cross-fleet specialization creates opportunities for scalable, global service platforms,” the consultancy wrote.

 

VSE said it expects the merger with PAG to create $15 million of annual synergies from cross-selling, insourcing of product support and repairs, operational and cost efficiencies, procurement savings, network optimization and working capital and supply chain improvements.

 

VSE also hopes it will protect the company from troughs in the commercial aviation business cycle by deepening customer diversification across the commercial, cargo, business aviation, rotorcraft, engine lessor, OEM and defense markets.