AAR Will Pay About $1.8 Billion for 65% of MRO Holdings at an Implied $4 Billion Enterprise Value, Funded With $2.1 Billion of New Debt, Preferred Stock Priced at $135 and a PIPE Priced at $104.50

by Sofia Lindqvist · September 30, 2026

Markets Writer, The SmallCap Signal

AAR Corp. has agreed to buy a 65% controlling stake in MRO Holdings, the El Salvador-, Mexico-, Colombia- and U.S.-based heavy-maintenance provider, at an implied enterprise value of $4.0 billion, according to a Sept. 28 release furnished with the company's Form 8-K. The 8-K puts the estimated cash purchase price for the 65% at $1,819,174,310, subject to working-capital and other adjustments, plus 5,783.894 shares of a new non-voting Series A convertible preferred stock with an agreed value of $780,825,690.

The release describes the price as 10.7x MRO Holdings' forecast calendar-2026 adjusted EBITDA, but that multiple is stated "including $75 million in anticipated run-rate cost synergies and net of transaction-related tax benefits with an expected present value of approximately $150 million." On the target's standalone numbers, the same release says MRO Holdings is expected to generate approximately $1.0 billion of sales and $285 million of adjusted EBITDA in calendar 2026, a margin of about 27%. AAR did not state a multiple on that unadjusted figure.

The financing stack is the part of the announcement that changes AAR's balance sheet. The company says it will fund the initial purchase, including repaying approximately $1.3 billion of MRO Holdings' existing borrowings, with "approximately $2.1 billion of new debt, approximately $780 million of equity issued at $135 per share to existing MRO Holdings shareholders, and approximately $230 million of proceeds from a private investment in public equity (PIPE) offering, led by The Pritzker Organization and other blue-chip institutional investors." The debt is supported by a fully committed bridge facility that AAR intends to replace with permanent financing before closing, and the release names Goldman Sachs Bank USA and Wells Fargo Securities as underwriters of the committed debt financing; the 8-K itself refers only to a debt commitment letter with "certain financial institutions."

The two equity legs are priced very differently. The PIPE, documented in a securities purchase agreement filed as Exhibit 10.2, is 2,215,791 common shares at $104.50 each for gross proceeds of approximately $231,550,159.50, with closing expected Oct. 1, according to the 8-K. The preferred going to the sellers converts at a ratio of 1:1,000 under the certificate of designations filed as Exhibit 3.1, which on our arithmetic is 5,783,894 common shares against the $780,825,690 agreed value, or $135.00 a share, matching the price the release states. The sellers are therefore being paid in stock valued at about 29% above the price at which outside investors are buying new shares the same day; that percentage is our arithmetic from the two stated prices.

The preferred is not senior. The 8-K says the Series A "has no preference over and is pari passu with the Company's common stock" on dividends and distributions. Holders will be bound by stockholder agreements that lock up the consideration shares for 18 months after closing, with a third becoming transferable after six months and two-thirds after 12, and that require them to vote with the board's recommendations during a standstill period, according to the filing.

The structure leaves 35% of MRO Holdings with its current owners, and the path to the rest is contractual. AAR gets an option on a further 5% exercisable at any time within six years of closing, and options on the remaining 30% in three 10% tranches that open on the second, third and fourth anniversaries, the release says. The 8-K sets the price for those tranches off MRO Holdings' trailing pro forma adjusted EBITDA times "the greater of 13.5x and the ratio of the Company's enterprise value to its last-twelve-months adjusted EBITDA, subject to a cap of 15.25x," adjusted for debt, cash and working capital. If AAR lets a tranche sit more than 60 days after it opens, the price is set off the greater of the equity value when the tranche first became exercisable plus 8% a year accruing from the fourth anniversary, and the equity value at actual exercise; if AAR has not exercised its call rights by the sixth anniversary, the sellers can require MRO Holdings to start a sale process, the 8-K says.

Cash from the target is ring-fenced for deleveraging at first. The release says AAR "will receive 100% of the excess cash flow from MRO Holdings during its first two years of ownership," and the 8-K says the LLC agreement "will restrict all distributions to the members until the second anniversary of the Closing." AAR expects net leverage of approximately 3.6x at closing including run-rate synergies, approximately 3.0x within two years and a return to its 2.0x to 2.5x target range over the medium term, and says it expects to keep a BB-category rating at S&P and Moody's.

Chairman and chief executive John Holmes cast the deal as scale in the part of the business that feeds the rest. "Through the acquisition of MRO Holdings, we will create the largest heavy maintenance MRO in the world, servicing a combined total of nearly 3,000 aircraft per year in our hangars," he said in the release. Roberto Kriete, chairman of MRO Holdings, said the owners "are staying on as shareholders of MRO Holdings because we share AAR's ambition for continued growth and want to be a part of it." Bain Capital, described as a significant minority shareholder in the target, also spoke in the release.

The results AAR published the same evening explain why it can borrow this much. First-quarter fiscal 2027 sales rose 24% to $918.0 million, GAAP net income was $40.1 million, or $1.00 a diluted share, adjusted diluted EPS rose 38% to $1.49 and adjusted EBITDA rose 34% to $117 million at a 12.7% margin, according to the separate earnings release. Operating cash flow was $55.8 million and net debt was $780.5 million at Aug. 31, for net leverage of 1.81x. AAR also nudged full-year guidance, now calling for sales growth excluding its Legacy Commercial Programs segment in the low teens versus the prior low double-digits to low teens, and guided second-quarter sales growth of 14% to 16% with an adjusted EBITDA margin of 13.0% to 13.4%, both also excluding that segment, and all of it explicitly excluding the acquisition.

AAR, headquartered in Wood Dale, Ill., sells new and used parts, runs airframe and component repair shops, and supplies the U.S. government through three core segments; it says the deal will lift its consolidated adjusted EBITDA margin from approximately 12% to approximately 16% before synergies and that it is now targeting 19% to 20% within three to four years. Roughly 90% of MRO Holdings' revenue comes from U.S. customers, the release says, with about 10,000 employees and 115 lines of airframe maintenance capacity.

The regulatory and timing terms are spelled out in the share purchase agreement, filed as Exhibit 2.1. Closing is expected in AAR's fiscal third quarter ending February 2027, subject to regulatory approvals and a pre-closing restructuring of the target's group. The outside date is Sept. 28, 2027, which AAR can extend to March 28, 2028 if only regulatory conditions remain (and which extends automatically to Dec. 27, 2027 if AAR has not exercised that right and only the target's pre-closing restructuring is outstanding), and if the deal fails on competition approvals AAR owes a termination fee of $100,000,000, or $150,000,000 if it has exercised the extension, according to the 8-K. There is no financing condition. AAR will also deposit $22.5 million in escrow at closing for purchase-price adjustments.

Goldman Sachs, William Blair and Centerview advised AAR, with Kirkland & Ellis as counsel and Goldman as PIPE placement agent; Solomon Partners led for MRO Holdings alongside RBC Capital Markets, with Greenberg Traurig as counsel, the release says. AAR's board approved the transaction unanimously and the company will fully consolidate MRO Holdings after closing.

Several things are not yet public. The permanent debt structure that replaces the $2.1 billion bridge has not been announced, nor its pricing; the release names no seller other than by reference to MRO Holdings' existing shareholders and Bain Capital; and the 8-K says the PIPE resale registration statement is due within 30 days of the Oct. 1 closing, extendable to 90 days if acquisition financial statements are not ready. AAR's guidance for the current year excludes the deal entirely, so the first consolidated outlook will not come until after closing.