AAR Corp to buy 65% of Panama's MRO Holdings for about $2.6 billion

What happened

AAR CORP., an Illinois-based supplier of aircraft parts and maintenance services, disclosed in an 8-K filing that it entered a Share Purchase Agreement on September 28, 2026 to acquire 6,500 shares — 65% of the issued and outstanding stock — of MRO Holdings, Inc., a company organized under the laws of Panama. The filing refers to the target as "MRO Panama."

The total consideration is an estimated $1,819,174,310 in cash plus 5,783.894 shares of newly designated non-voting Series A Convertible Preferred Stock with an agreed value of $780,825,690. Together that is roughly $2.6 billion.

AAR also has an option to buy an additional 5% of MRO Panama, exercisable before or after the closing. The deal is expected to close in AAR's fiscal third quarter ending February 2027, subject to regulatory approvals and other conditions. The agreement includes a $100 million termination fee payable by AAR if the deal fails on competition-law grounds, rising to $150 million if AAR has extended the outside date.

The company's shares closed at $106.75, down 7.25% from the prior close of $115.09, on volume of about 2.56 million shares — roughly six times the average daily volume of about 425,000, according to the price data.

Terms of the agreement

At closing, AAR will deposit $22,500,000 into escrow to secure post-closing purchase-price adjustments for net working capital, debt, cash and transaction expenses.

Following the closing, AAR and the seller will jointly own a newly formed parent entity, MRO Holdings, governed by an LLC agreement. AAR's subsidiary will appoint five of eight board managers, including one independent manager, and will hold a majority of board votes at all times. The seller's subsidiary will appoint three managers.

The seller retains consent rights over specified matters, including certain related-party transactions, leverage above 4.0x, and — until AAR exercises a second call right starting on the third anniversary — acquisitions above $50 million. AAR holds a call option over the seller's remaining units, structured in tranches exercisable on the second, third and fourth anniversaries of closing. After the fourth anniversary, AAR can compel a sale of the whole entity.

Until the second anniversary of closing, distributions to the members are restricted. The seller and MRO Panama also agreed not to solicit alternative transactions before closing.

What this means

An 8-K is a "current report" — the form a US-listed company must file with the Securities and Exchange Commission when a significant event occurs between its regular quarterly and annual reports. The item numbers on the cover page determine what is being disclosed. Item 1.01 covers entry into a material definitive agreement, which is what the purchase agreement is. Item 3.02 covers an unregistered sale of equity, which here is the Series A preferred stock being issued to the seller as part of the purchase price rather than sold to the public. Item 7.01 is a Regulation FD disclosure, a catch-all used when the company gives information to certain outside parties. Item 9.01 attaches the exhibits.

Preferred stock is an ownership stake that sits alongside common stock but typically has its own contract-like terms set out in a "certificate of designations" filed with the state of incorporation. In this case the terms state that the Series A preferred ranks pari passu — that is, equal to, not ahead of — AAR common stock for dividends and distributions, and it is non-voting and convertible. AAR's common stock is what trades on the NYSE under the symbol AIR; the preferred shares issued to the seller are not publicly listed.

The Series A figure of 5,783.894 shares works out to a price of roughly $135,000 per preferred share, which is why so few shares carry a stated value of about $781 million. That is a consequence of the seller-side ownership structure rather than a signal about AAR's share price.

MRO Holdings provides aircraft maintenance, repair and overhaul services — the work airlines outsource to keep planes flying, including heavy checks and component repairs. AAR already competes in this space; buying a majority stake in a Latin American operator expands that business. AAR says ownership of the remaining 35% will be governed by the LLC agreement, with the seller's exit path laid out through AAR's call options.

The share-price decline on heavy volume is price data recorded alongside the filing. The provided sources do not state a reason for the move, and this article does not assert one.

The transaction still requires regulatory approvals and the satisfaction of closing conditions, including a pre-closing restructuring of MRO Panama's corporate group. The filing does not state whether shareholder approval of AAR is required, and the outside date for closing is September 28, 2027, extendable under specified circumstances.