CMA weighs Safran’s THSA divestiture as potential fix for competition issues in Collins merger

The United Kingdom’s Competition and Markets Authority has stepped up its assessment of a proposed merger between French aerospace manufacturer Safran and Collins Aerospace, a division of US-based RTX Corporation, by provisionally supporting a remedy that could alleviate significant competition concerns. The case focuses on the competitive implications of the acquisition in the niche but vital segment of Trimmable Horizontal Stabilizer Actuator systems, or THSA systems, and reflects the regulator’s increasing assertiveness in reviewing high-tech mergers with local manufacturing implications.

Safran’s planned acquisition of certain assets from Collins Aerospace includes overlap in the THSA systems market, a category of aircraft components that plays a fundamental role in flight stability, control, and fuel efficiency. The Competition and Markets Authority has flagged that allowing this merger to proceed without remedies could harm competition by limiting supplier options, reducing innovation, and potentially driving up costs for aircraft manufacturers. In turn, these costs may be passed along to commercial airlines and logistics operators—ultimately impacting ticket pricing and freight rates.

The regulator’s decision to consider the proposed remedy, which includes the sale of almost all of Safran’s THSA systems production capability, indicates a potential path forward for the merger. The CMA will now move to gather feedback from third parties before issuing a final determination.

What are THSA systems and why are they vital in aerospace?

Trimmable Horizontal Stabilizer Actuator systems are mechanical assemblies used to adjust the horizontal tail of an aircraft during flight. These components enable fine-tuned aerodynamic control, stabilising the aircraft under changing loads and flight conditions. By allowing the tailplane’s angle to be trimmed in real time, THSA systems help reduce drag, optimise fuel usage, and enhance aircraft performance. Their role becomes especially significant in long-haul, wide-body aircraft where marginal gains in efficiency translate into substantial fuel savings.

Despite their relatively low profile in public discourse, THSA systems are critical to aircraft design and operation. As aircraft increasingly rely on digital flight control systems, actuators such as the THSA are integrated into fly-by-wire architectures, making their performance, reliability, and weight key differentiators. Any disruption to the THSA systems market—whether through reduced supplier competition or delayed innovation—could have downstream impacts on aircraft manufacturers, airlines, and the global aviation supply chain.

In the UK context, the concern is further amplified by Collins Aerospace’s manufacturing presence in northern England. Should this facility be consolidated or downsized following the merger, it could pose longer-term risks to the region’s industrial base, workforce stability, and national supply chain autonomy.

How did the CMA identify the risk, and what remedy has Safran proposed?

The Competition and Markets Authority launched a Phase 1 investigation into the Safran-Collins transaction to assess whether it would result in a substantial lessening of competition in the UK. Early in the process, both companies acknowledged that the deal could raise concerns in the THSA systems market, particularly given their combined market presence and influence in the aircraft actuator segment.

To address this, Safran offered an undertaking to divest substantially all of its THSA business. This divestiture would be designed to maintain competition by ensuring that an independent player remains active in the market, thereby preserving choice for aircraft manufacturers and keeping price and innovation pressures intact. The CMA has provisionally accepted this proposal as potentially sufficient to resolve its concerns and has opened the remedy for market consultation.

The agency clarified that Safran would retain only a small portion of its THSA operations, which it described as commercially and operationally separate from the divested unit. The aim is to ensure that the retained business does not continue to compete directly with the merged entity, thereby maintaining the efficacy of the remedy.

How does this merger fit into broader aerospace industry trends?

This review comes at a time when the global aerospace sector is undergoing significant consolidation. Safran, a Paris-headquartered company with major operations across propulsion, avionics, and aircraft equipment, has pursued multiple acquisitions to deepen its footprint in high-value segments. Similarly, Collins Aerospace, under RTX Corporation, has grown to become one of the world’s largest suppliers of actuation systems, avionics, interiors, and aerostructures.

The importance of the THSA systems market within this larger ecosystem lies in its high technical barriers to entry and criticality to aircraft certification standards. Few companies globally have the capability to design and produce THSA systems at scale, and the merger of two of them inevitably attracted regulatory attention. This situation echoes previous CMA decisions in sectors where high technological complexity, long development cycles, and limited supplier bases raise red flags.

Post-Brexit, the UK has demonstrated a more independent and interventionist approach to merger control, particularly in strategic industries such as aerospace and defence. The Safran-Collins merger, though global in nature, directly affects the UK’s domestic industrial landscape, given Collins’ operational base in northern England and its role as a supplier to both local and global aircraft manufacturers.

How have markets responded to the regulatory developments?

The stock market reaction to the regulatory review has been telling. Shares of Safran (EPA: SAF) declined by 6.09% on April 4, 2025, closing at €219, and marked a cumulative 7.64% decline for the week. Analysts believe the drop reflects uncertainty among investors about the regulatory risks and the potential financial impact of the required divestiture. However, several equity research firms continue to view Safran as undervalued, noting that the company’s stock is trading at a 15% discount relative to its estimated fair value.

In contrast, RTX Corporation (NYSE: RTX), the parent company of Collins Aerospace, has maintained a steadier position. Its stock closed at $130.23, down 2.96% on the same day, but remained well within its 52-week trading range of $99.07 to $136.17. Analyst sentiment for RTX has turned more bullish in recent weeks. Major investment banks such as JPMorgan Chase & Co. have raised their price target for the stock to $150, citing long-term growth prospects and confidence in the post-merger integration strategy. R.W. Baird also upgraded the stock to a “strong buy” in mid-March, reinforcing positive sentiment around RTX’s aerospace ambitions.

Investors are watching closely to see whether the proposed THSA divestment by Safran clears regulatory hurdles, allowing the transaction to proceed and unlock projected synergies. For shareholders in both companies, the outcome could materially affect strategic positioning in the high-margin aerospace components market.

What’s at stake for the UK aerospace supply chain?

From a domestic perspective, the UK’s aerospace supply chain is among the most advanced in Europe, with capabilities in engines, wings, avionics, and systems integration. The country’s industrial strategy has repeatedly emphasised the need to preserve high-value manufacturing and maintain national resilience in the face of global supply disruptions. In that context, the CMA’s intervention in the Safran-Collins deal is not simply about competition—it reflects broader policy considerations regarding technological sovereignty, regional economic development, and employment.

If the divestiture is approved and the merger is cleared, it would set a precedent for how companies engaging in cross-border aerospace mergers should approach local regulatory expectations. Safran’s willingness to divest a strategically valuable unit in the THSA systems market illustrates the level of flexibility that may be necessary to win approval in sensitive sectors. It also suggests that regulators are willing to allow consolidation—but only if meaningful structural remedies are proposed.

As the CMA moves to gather industry feedback on the proposed remedy, companies across the aerospace value chain—especially those involved in aircraft control systems and actuation technologies—will be watching closely. The outcome may influence the competitive landscape for years to come and determine how future mergers are structured to balance efficiency gains with market integrity.