VSE to Buy Precision Aviation Group for $2.0B, Targets 50% Revenue Jump and $15M Synergies

Core Viewpoint - VSE Corporation has announced a definitive agreement to acquire Precision Aviation Group (PAG) for approximately $2.025 billion, which is expected to significantly enhance VSE's aviation aftermarket strategy and profitability over the coming years [2][6]. Deal Rationale: Scale, Footprint, and Capabilities - The acquisition is projected to increase VSE's revenue by about 50% on a pro forma basis and aims for more than 20% consolidated adjusted EBITDA margins in the next few years as integration and synergies are realized [3][6]. - Management anticipates approximately $15 million in annualized synergies from the acquisition, driven by procurement, network optimization, and cross-selling opportunities [6]. - The combination of VSE and PAG is described as complementary, with minimal overlap in capabilities, enhancing VSE's global footprint and improving customer service metrics such as turnaround times and supply chain responsiveness [3][5]. Operational Expansion - Post-acquisition, the combined company will operate 60 locations globally, which includes 47 repair facilities and 11 distribution centers of excellence [4]. - PAG is recognized as a global provider of aviation aftermarket MRO services, distribution, and supply chain solutions across various aviation sectors, including commercial, business, general aviation, rotorcraft, and defense [5]. Financial Details - The deal structure includes $1.75 billion in cash, approximately $275 million in equity to GenNx360, and up to $125 million in earnout, valuing PAG at about 13.5 times projected 2025 adjusted EBITDA [6]. - PAG is expected to contribute approximately $615 million in pro forma revenue for 2025, with adjusted EBITDA margins exceeding 20% [6].