Thales, a global leader in aerospace and defense technologies, has entered into exclusive negotiations to acquire Cobham Aerospace Communications, a renowned supplier of advanced safety cockpit communication systems. The proposed deal, valued at USD 1.1 billion, aims to bolster Thales' Avionics portfolio and strengthen its position in the communications and connectivity markets.
Cobham Aerospace Communications, with its team of 690 employees, including 190 engineers, operates across several countries, including France, South Africa, the USA, Canada, and Denmark. The company is expected to generate around $200 million in revenues in 2023.
Through this acquisition, Thales seeks to enhance its Avionics offerings in the following ways:
1. Global Leading Position: Thales aims to solidify its position in safety cockpit communications by adding Cobham Aerospace Communications' leading expertise in the field. This move will complement Thales Avionics' existing strong offerings.
2. Cutting-Edge Products and Market Presence: Thales intends to leverage Cobham Aerospace Communications' recently developed innovative products and benefit from its relationships with major OEMs (Original Equipment Manufacturers). The acquisition also presents opportunities in the aftermarket and retrofit segments.
The acquisition is expected to deliver value to Thales in several ways:
Growth and Margins: Thales anticipates achieving double-digit annual growth and improved margins as a result of the acquisition.
Financial Outlook: The transaction is projected to have an EPS (Earnings Per Share) accretive impact in the first year itself. It is valued at 17x EBIT (Earnings Before Interest and Taxes) pre-synergies for FY23, and 15x EBIT post-run rate cost synergies.
Yannick Assouad, Thales Executive Vice President Avionics, expressed excitement about the acquisition, emphasizing the potential to establish a game-changer in the communications and connectivity market. By ensuring a secure and real-time connection between the cockpit and air traffic control, Thales aims to optimize flight trajectories, reduce fuel consumption, and lower CO2 emissions within the next few years.
Nicolas Bonleux, Chief Executive Officer of Cobham Aerospace Communications, highlighted the successful transformation of the company under Advent's ownership and the opportunities for further growth in the rapidly evolving aircraft connectivity and communication markets. He expressed confidence in joining forces with Thales, enabling both companies to contribute to safer, greener, more comfortable, and more efficient air travel.
Cobham Aerospace Communications specializes in cockpit communications, offering a range of avionics solutions such as L-Band Satcom systems, digital audio and radio management solutions, and passive antenna systems for connectivity, communications, and navigation. The company is well-positioned to capitalize on OEMs' increasing production and retrofit opportunities.
Thales' integration of Cobham Aerospace Communications' safety cockpit communication systems will position the company to meet the growing demand for connected cockpits. By the end of the decade, Thales envisions providing permanent and secure connectivity solutions that enhance safety, affordability, and sustainability in the aeronautical market.
The acquisition is expected to result in value creation for Thales shareholders through increased sales growth and EBIT (Earnings Before Interest and Taxes) margin improvement. Synergies identified between the two companies include cost savings, revenue growth, and market expansion opportunities.
The transaction is subject to consultation with employee representative bodies and regulatory approvals. The closing is anticipated to take place in the first half of 2024. Thales will fund the acquisition using its existing cash resources, further solidifying its position as a key player in the aerospace industry.
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