Activist hedge fund TCI ups the pressure on Safran to ditch its huge €8.5bn Zodiac deal

Rebecca Smith
Stormy times ahead? TCI has been vocal in its view of the deal
Stormy times ahead? TCI has been vocal in its view of the deal (Source: Getty)

Activist hedge fund TCI Fund Management is increasing its pressure on French aircraft engine maker Safran to ditch its plans to buy aeroplane seat maker Zodiac in a €8.5bn (£6.6bn) deal.

TCI said today it had updated its valuation of the company and that Zodiac's shares were now worth €7-€10 each after the firm posted a first-half loss last Friday. The investor warned that an offer above €10 results in "value destruction".

It had previously valued it at €10 euros a share in a presentation from March.

Read more: Activist funds steps up bid to block €8.5bn deal... and now it's personal

The Children’s Investment (TCI) Fund has previously made clear its opposition to the deal under which Safran, in which it owns a 4.1 per cent stake, is due to buy Zodiac.

TCI said it had revised its valuation partly due to a reported loss in the first half of 2017.

Sir Chris Hohn’s activist hedge fund has been campaigning for Safran to scrap its deal, saying in March that the chairman should abandon the takeover or face being ousted.

Safran said at the time it was confident in its own ability "to restore the operating profitability of the businesses currently in difficulty”.

Hohn has since written to Safran's board members too, threatening to sue them personally if the deal goes through and is unsuccessful.

“If you do decide to proceed with the transaction and it harms Safran, this would constitute clear negligence on your behalf,” Hohn said in the letter.

Read more: Safran's €8.5bn takeover of aircraft seat maker Zodiac takes off

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