(Reuters) – French industrialist Safran announced on Friday the acquisition of the flight controls and actuation business of Collins Aerospace, in an all-cash offer based on an enterprise value of $1.8 billion (€1.62 billion),
The purchase is the largest acquisition by the French aerospace supplier since that of seat maker Zodiac in 2018 and comes as the group prepares for the next generation of aircraft in a context of increasing electrification.
It targets a growing market for actuators, which convert electronic cockpit instructions into physical movements to help control aircraft, such as providing additional lift during landing.
Collins Aerospace, part of US aerospace and defense giant Raytheon Technologies, recently renamed RTX, said the sale would “optimize resources”.
Potential successors to the best-selling airliner models, the Airbus A320 and Boeing 737, are expected in the middle of the next decade, meaning key decisions on long-term parts relationships are expected around 2030.
“The agreement will allow us to position ourselves very solidly for the rest of the events,” said Safran chief executive Olivier Andriès during a conference call with analysts.
F-35 SUPPLIER
The acquisition, which is expected to close in the second half of 2024, will increase earnings per share in the first year, the French group said.
“I don’t rule out that we may have to do some very small-scale divestitures in some places, but that wouldn’t be significant in my view,” the chief executive said in reference to negotiations with competition authorities.
The acquisition would make Safran, which supplies engines for the French Rafale fighter, a supplier of the F-35, the competing US military program, and increase its exposure to most major commercial aircraft programs.
According to Safran, the transaction is expected to generate pre-tax cost synergies of approximately $50 million per year, phased in from 2025 to 2028.
The targeted business is expected to generate 2024 revenue of around $1.5 billion and Ebitda (earnings before interest, taxes, depreciation and amortization) of $130 million, Safran said.
It employs approximately 3,700 people spread over eight sites in Europe (in France, the United Kingdom and Italy) and in Asia.
(Reporting Tim Hepher, writing by Diana Mandiá, editing by Kate Entringer)
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