Safran Agrees to Buy Zodiac Aerospace for $9 Billion -- 3rd Update
19 Enero 2017 - 4:01AM
Noticias Dow Jones
By Robert Wall
LONDON--French aerospace supplier Safran SA said Thursday it had
agreed to buy beleaguered cabin-interiors specialist Zodiac
Aerospace for EUR8.5 billion ($9 billion), the latest sign of
consolidation among suppliers to the world's top plane makers.
The deal would make Safran the world's No. 3 aerospace supplier
to big plane makers Airbus SE and Boeing Co., with a combined EUR21
billion in sales.
Boeing and Airbus, the world's largest plane makers, are putting
increased pressure on their suppliers for discounts as they seek to
win orders from airlines for new planes by offering lower prices.
That has caused suppliers to seek greater scale to gain
efficiencies.
The French tie-up comes only three months after Rockwell Collins
Inc. agreed to pay $6.4 billion to buy Zodiac's chief rival, B/E
Aerospace Inc. in a deal that would unite two of the biggest
plane-parts suppliers.
But some combinations have run into trouble with the plane
makers on concerns that consolidation could go too far. Honeywell
International Inc. less than a year ago pulled the plug on its $90
billion bid for United Technologies Corp. amid opposition from
Airbus and Boeing.
Safran will pay EUR29.47 a share for Zodiac in a tender offer.
If 50% of shares are tendered, the company will then merge based on
an exchange ratio of 0.485 a Safran share for each Zodiac share.
The structure will allow Zodiac's family shareholders and two
institutions to remain investors in the combined company. Including
debt, the deal is valued at EUR9.7 billion.
Safran will also pay a EUR5.50-a-share special dividend to its
shareholders before the deal closes.
Both boards back the deal, which still requires approval from
shareholders and regulators.
Safran and Zodiac said the combination of the two French
companies would generate at least EUR200 million in annual pretax
savings. Half of those would come in the first year, the companies
said.
They don't expect big layoffs because of the complementary
nature of the businesses, Safran Chief Executive Philippe
Petitcolin told reporters.
Safran Chairman Ross McInnes said the deal underpinned the
company's plan to bolster its aerospace activities.
Safran, a maker of everything from plane wiring to aircraft
engines, has long had interest in acquiring the smaller French
aircraft supplier. Zodiac in 2010 rejected a takeover proposal from
the company.
The renewed takeover plan comes after a turbulent period for
Zodiac. The company fell behind on providing seats to airlines for
Boeing and Airbus jets, angering customers, delaying plane
deliveries, and causing some carriers to seek new suppliers. Airbus
also publicly chastised Zodiac for late delivery of plane toilet
components for the European plane maker's new A350 long-range
jet.
The companies said Safran would enable Zodiac to more quickly
overcome problems in its troubled seats and plane interior
business. Mr. Petitcolin said resources wouldn't be diverted from a
key aircraft engine Safran builds in partnership with General
Electric Co. for Airbus and Boeing.
Safran plans to extend its CEO's mandate by three years to help
manage the integration of Zodiac and oversee a big jump in plane
production required by the plane makers.
Shares in Zodiac had declined more than 10% over the past two
years despite record plane deliveries during the period.
Safran said it would finance the transaction from cash, proceeds
of already agreed disposals, existing debt facilities and a EUR4
billion bridge loan. It said it would target an investment grade
profile upon closing and its dividend payout plan of around 40% of
adjusted net income.
Bank of America Merrill Lynch and Lazard advised Safran. BNP
Paribas and Rothschild worked with Zodiac Aerospace.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
January 19, 2017 04:46 ET (09:46 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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