Aircraft-engine maker Safran buys plane-seat supplier Zodiac Aerospace for $10.5 bn
20 Jan 2017
Aircraft-engine maker Safran SA yesterday struck a deal to buy plane-seat supplier Zodiac Aerospace SA for about $10.5 billion, a move designed to combine two of the biggest aerospace groups in France.
French President Francois Hollande welcomed the deal and said it as a ''beautiful industrial operation.
The move comes more than five years after Zodiac shareholders rejected an opportunistic takeover offer from Safran.
Under the two stage terms of the deal agreed by the board of both companies, Safran will pay €29.47 per share in cash, 26 per cent above Zodiac's Wednesday closing.
Zodiac's controlling shareholders, the founding families and two investment funds - the Peugeot family's FFP and the Fonds Strategique de Participations, will tender their shares to the cash offer, but instead fold their shares into a subsequent merger between the two companies, based on 0.485 Safran shares for each Zodiac share.
Safran shareholders would receive a special dividend of €5.5 a share before the deal closes in 2018.
The French government, which holds 14 per cent of Safran, will remain a shareholder of the merged group, similar to the deal arrived at with Zodiac's controlling shareholders.
Philippe Petitcolin, Safran's CEO, said the deal will create the world's third-biggest aerospace supplier behind GE and Pratt & Whitney owner United Technologies Corp., and accelerate the return of Zodiac's interiors operations to ''historical levels of profitability.''
The merger will unite Safran's activities spanning turbines, landing gear, brakes and avionics with Zodiac's cabin interiors, fuel, lighting, safety and power-distribution gear.
Safran is also keen to access Zodiac's technology, key to development of the ''more electrical aircraft.''
The merged company will have 92,000 employees, half of them in France, more than €20 billion in sales and recurring operating profit of €2.7 billion.
Safran expects the deal to bring in cost savings of €200 million, mainly from joint procurement and marketing
Zodiac, which has a market value of €6.7 billion, is a global leader in aerospace equipment and systems on-board commercial, regional and business aircraft as well as helicopters.
Founded in 1896 by Maurice Mallet, the 120-year company is now controlled by various French families.
Zodiac designs and markets seats and cabin fittings, complex sanitary and food equipment, fuel circulation, oxygen and life support, electrical power management, cockpit controls and displays, lighting and actuators, hydraulics and controls, environment control systems, emergency evaluation systems, emergency arresting, interconnect, parachute and protection systems, elastomeric technologies & systems, telemetry, telecommunications and airbags.
The Plaisir, France-based company employs 35,000 people worldwide and has annual sales of €5.2 billion.
Paris-based Safran, formed through the 2005 merger between the aircraft and rocket engine manufacturer and aerospace component manufacturer group SNECMA and security company SAGEM, is a French multinational aircraft engine, rocket engine, aerospace-component, defense, and security company.
