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08:23 AM, January 20, 2017
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Safran Bids US$9 Billion To Buy Plane-Cabin Maker Zodiac Aerospace
Safran Bids US$9 Billion To Buy Plane-Cabin Maker Zodiac Aerospace

French aero engine manufacturer Safran on Thursday has launched a $9 billion agreed bid for seats manufacturer Zodiac Aerospace to create the world's third-largest aerospace supplier as the industry bulks up to tackle record high output plans.

The deal comes three months after Zodiac's competitor B/E Aerospace agreed to be acquired by Rockwell Collins and six years following Zodiac's family shareholders publicly snubbing a botched approach from Safran, branding it "opportunistic".

The two have frequently been linked as suppliers combine technologies and services to support rising aircraft production, the French company announced Friday.

However, some analysts warn such a tie-up is risky as Zodiac recovers from a nearly three-year cabin production crisis that disrupted some Western jetliner deliveries.

Safran Chief Executive Philippe Petitcolin said he was not worried about Zodiac's recovery from recent production and quality problems in its US seat manufacturing plants and pledged not to let the deal distract Safran from development of new 'LEAP' engines for Airbus (AIR.PA) and Boeing BA.M.

"Don't worry, there will be no transfer of skills from LEAP," he told reporters in a conference call.

Zodiac has always said it would stay independent and scoffed at Safran's original approach in 2010, saying any tie-up would offer "very slight" synergies with most of its business.

But after a series of profit warnings, Chief Executive Olivier Zarrouati said last March Zodiac would be "receptive to any offer that is in the interests of the company".

Safran and Zodiac declined to say when the latest round of negotiations had started, but two people familiar with the deal said it had come together "very quickly," negotiated by a tiny group led by the CEOs and chairmen of both companies.

Despite earlier rumors of a tie-up, the people said the idea of a merger began to get serious attention in November and December, suggesting it may have received a boost from October's $6.4 billion U.S. takeover of Zodiac's main rival B/E Aerospace by Rockwell Collins.

"Sector consolidation is something you can see happening," Zarrouati told Reuters, adding aerospace contained few remaining opportunities for deals on such a scale without significant overlap that could fall foul of anti-trust regulators.

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