Safran to Buy Zodiac Aerospace for $9 Billion -- 4th Update
19 Enero 2017 - 6:17AM
Noticias Dow Jones
By Robert Wall
LONDON--France's Safran SA said Thursday it had agreed to buy
beleaguered cabin-interiors specialist Zodiac Aerospace for EUR8.5
billion ($9 billion), in the latest sign of consolidation among
suppliers to the world's top plane makers.
The deal would make Safran, with a combined EUR21 billion in
sales, the world's No. 3 aerospace supplier to Airbus SE and Boeing
Co-- United Technologies Corp. is the No. 1, ahead of General
Electric Co.'s aviation business.
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 by offering lower prices. That has
caused suppliers to seek greater scale to gain efficiencies.
The 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., uniting two of the biggest plane-parts
suppliers.
But some deals have been opposed by plane makers on concerns
that consolidation could go too far. Honeywell International Inc.
pulled the plug on its $90 billion bid for United Technologies
Corp. less than a year ago 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 companies will 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 deal would generate at least EUR200
million in annual pretax savings, half of which would come in the
first year.
The deal shouldn't create big layoffs, because of the
complementary nature of the businesses, Safran Chief Executive
Philippe Petitcolin told reporters.
Safran, which makes everything from plane wiring to aircraft
engines, has long been interested in acquiring the smaller
supplier. Zodiac in 2010 rejected a takeover proposal from the
company.
This time a sale made more sense for shareholders and employees,
Zodiac CEO Olivier Zarrouati said.
Negotiations between the two began late 2016 and moved quickly,
Safran Chairman Ross McInnes said. The French government, a Safran
shareholder, was aware of the talks and gave its blessing to the
deal, he said.
Almost half the combined company's employees would be in France,
with a sizable footprint in the U.S.
The 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 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 help Zodiac more quickly
overcome problems in its seats- and plane-interior business.
Mr. Petitcolin added that 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.
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 a dividend payout plan of around 40% of
adjusted net income.
Write to Robert Wall at robert.wall@wsj.com
(END) Dow Jones Newswires
January 19, 2017 07:02 ET (12:02 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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