French aircraft engine maker Safran launches €8.5bn takeover of aircraft seat maker Zodiac Aerospace

 
Rebecca Smith
Safran's purchase of the plane-seat supplier will bring together two of France's biggest aerospace groups
Safran's purchase of the plane-seat supplier will bring together two of France's biggest aerospace groups (Source: Getty)

Safran has launched an agreed €8.5bn (£7.4bn) bid for aeroplane seat maker Zodiac Aerospace, creating the world's third-largest aerospace supplier by revenue.

Philippe Petitcolin, Safran's chief executive said the acquisition represents "a unique opportunity" and said his company's industrial expertise will "accelerate the return to their historical levels of profitability in the seats and cabin activities".

He said he was "eager to drive this strategic move" that will bring together the two French firms.

Read more: Zodiac rejects bid from Safran

Safran will offer €29.47 per share in cash - 26 per cent above Wednesday's close - the companies said.

Olivier Zarrouati, chairman of Zodiac's management board said the move will lead to "the creation of a world leader" able to "shape the future of aerospace".

Zodiac's share price had fallen nearly 22 per cent in two years, after problems in production for seats for Airbus' A350.

Safran meanwhile, dominates the supply of engines for short-haul passenger jets, with its long-running partnership with General Electric.

Off the back of the news, Zodiac's share price rose as much as 24 per cent to €28.85, while Safran's edged up more than two per cent to €68.85.

Andy Chambers, analyst at Edison Investment Research, said: “Zodiac has been struggling to meet the civil aerospace ramp up, notably for interiors on the A350, and timing looks favourable in terms of potential recovery over the next 18 months. The combination will create an aerospace business almost equivalent in sales term to GE’s, Safran’s partner in the CFM aero engine joint venture, and the largest in Europe."

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He added that Safran had done "a very good job" of refocusing on civil aerospace, which he feels is "a true growth area".

Safran previously approached the family-controlled aerospace seat firm back in 2010 to try and agree a deal, but was turned down.

It was advised by Lazard and Bank of America Merrill Lynch, while Zodiac was advised by Rothschild and BNP Paribas.

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