Aerospace and defense suppliers Woodward, Hexcel combining

Woodward and Hexcel are merging in an all-stock deal that would create one of the largest suppliers in the aerospace and defense industry.

The companies say the tie-up will allow them to create more efficient aircraft that will reduce emissions, a big hurdle for the aerospace industry.

The new company, called Woodward Hexcel, will generate more than $5 billion in annual sales with a market capitalization nearing $14 billion and more than 16,000 employees.

Woodward Hexcel will have manufacturing operations in 14 countries on five continents.

Hexcel shareholders will receive a fixed exchange ratio of 0.625 shares of Woodward Inc. common stock for each share of Hexcel Corp. stock that they own. Woodward shareholders will continue to own the same number of shares in the combined company as they do immediately prior to the closing.

Existing Woodward shareholders will own about 55% of the combined company, with Hexcel shareholders owing about 45%.

The deal is expected to close in the third quarter.