TransDigm Group

TDG

Market cap $77.8B

TDG agrees to buy Stellant Systems for $960 million, expanding its aerospace and defense portfolio with proprietary, aftermarket-rich high-power electronic components.

WASHINGTON--(BUSINESS WIRE)--Arlington Capital Partners, a Washington, D.C.-area private investment firm specializing in government regulated industries, today announced it has agreed to sell Stellant Systems, Inc (“Stellant” or “the Company”), a premier designer and manufacturer of radio frequency (“RF”) and microwave amplification products, to TransDigm Group Incorporated ("TransDigm Group") (NYSE: TDG), a leading global designer, producer and supplier of highly engineered aircraft components.

CLEVELAND, Dec. 31, 2025 /PRNewswire/ -- TransDigm Group Incorporated (NYSE: TDG) today announced it has entered into a definitive agreement to acquire Stellant Systems, Inc. ("Stellant" or "the Company"), a portfolio company of Arlington Capital Partners, for approximately $960 million in cash, including certain tax benefits. Stellant, headquartered in Torrance, California, is a leading global designer and manufacturer of high-power electronic components and subsystems serving the aerospace and defense end market.

TransDigm Group Incorporated (TDG) stands out as a rare compounder in aerospace, leveraging regulatory barriers, proprietary products, and decentralized management for high returns. Leverage amplifies returns but narrows margin of safety; recent debt-funded special dividends and CEO transition have pressured the stock and raise capital allocation questions. With secular tailwinds and a fragmented aftermarket, TDG remains a high-quality hold, but current valuation does not offer a compelling entry point for new investors.

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TransDigm Group is a core capital gain investment, driven by exceptional management, unique business model, and dominant market positioning. TDG's value creation model leverages proprietary, single-source aerospace components, aggressive pricing power, and disciplined, decentralized management akin to Berkshire Hathaway. Despite political scrutiny over pricing and DoD contract risks, TDG's competitive moat and high switching costs minimize material threats to its business.

TransDigm Group (TDG) earns a buy rating, driven by structural pricing power, visible growth catalysts, and disciplined capital allocation. TDG benefits from proprietary, mission-critical components with high aftermarket exposure, locking in long-duration revenue streams and strong pricing power. Defense demand is robust, with 13% FY25 growth and new program wins, while commercial OEM headwinds are easing as destocking ends.

TransDigm generates EBITDA margins above 50%, rivaling software companies despite being an aerospace supplier. The company has paid nearly $250 per share in special dividends since 2019.

TransDigm (TDG) reported earnings 30 days ago. What's next for the stock?

Class A shares of the Alger Growth & Income Fund outperformed the S&P 500 Index during the third quarter of 2025. Apple Inc., Broadcom Inc., and Alphabet Inc. were among the top contributors to performance. Honeywell International Inc., Eli Lilly and Company, and TransDigm Group Incorporated were among the top detractors from performance.