The WSJ is reporting that Rockwell Collins Inc. has entered into an agreement to buy B/E Aerospace Inc. for 6.4 billion. This acquisition will unite two of the global aerospace industry’s largest suppliers.

Rockwell Collins to Buy B/E Aerospace for $6.4 Billion

Today, aerospace is a highly concentrated industry, dominated by a small number of large firms that are supported by a large number of smaller contractors. Consolidation is now the norm for aerospace providers. The sector is a capital intensive and high-value added industry. Profitability depends a great deal on technical expertise, innovation and the ability to accurately price long-term contracts for programs that may take years to design, develop and build.

Suppliers have recently been under pressure from Airbus Group SE and Boeing Co. to speed up production as they work through a backlog of more than 10,000 jets and are also increasingly asking for concessions and price reductions from suppliers.

Rockwell Collins has long been viewed in the industry as a very attractive acquisition target but has proven to be untouchable. Their acquisition of B/E Aerospace will allow them to move into the major “smart” systems market and will give them a bigger share of the commercial jet market for both new production as well as the very profitable business of retrofitting older planes.