Safran to acquire Collins Aerospace’s actuation and flight control activities

Safran, a global aerospace leader, has announced its intention to acquire the high-technology actuation and flight control business of Collins Aerospace. The business, which is considered critical for commercial and military aircraft and helicopters, is expected to bring in sales of around $1.5 billion and an EBITDA of $130 million in 2024.

The acquisition will see Safran taking over around 3,700 employees across eight facilities in Europe (France, the UK, and Italy) and Asia, along with MRO and engineering capabilities.

Olivier Andriès, Chief Executive Officer of Safran, stated, “The contemplated transaction represents a unique opportunity to develop our position in mission critical actuation and flight control functions. Our highly complementary product offerings would create a global leader in these segments with around $1.8 billion of sales. The transaction would enable us to deliver a comprehensive offering to our clients and position us extremely well for next-generation platforms as the segments move toward increased electrification. The business is a perfect fit with both our product portfolio and our DNA with leading technologies, recurring aftermarket sales, and profitable growth.”

The deal is projected to generate approximately $50 million of annual pre-tax run-rate cost synergies, which are expected to be progressively implemented from 2025 to 2028. These synergies would be driven by economies of scale in procurement, R&D complementarity, internalization of sourcing and production flows. Additional commercial synergies would come from integrated offerings and diversification of customers and geographic mix, continuing beyond 2028 with run-rate achieved on next-generation aircraft by the middle of the next decade.

The enterprise value of $1.8 billion represents a multiple of around 14x pre-cost synergies and approximately 10x post run-rate cost synergies based on 2024E EBITDA, with an expected IRR and ROCE 2028E of the transaction surpassing the Group’s WACC and accretive impact on Safran earnings per share from the first year. The transaction is expected to be fully financed with available cash, with limited impact on the Group’s net leverage and a reiterated commitment to the robust Group’s investment grade rating.

The deal is subject to consultation with relevant employee representative bodies of Collins Aerospace and Safran, customary regulatory approvals, and closing conditions, with completion anticipated in the second half of 2024.