Aircraft-engine maker Safran (EPA:SAF) has launched a €8.5 billion (£7.3bn) cash bid for troubled aeroplane seat maker Zodiac Aerospace (EPA:ZC), uniting France’s two largest aeronautic suppliers.
Zodiac Aerospace have previously rejected an approach from Safran, branding the offer as “opportunistic” and saying the marge would offer “very slight” synergies.
Olivier Zarrouati, chairman of Zodiac Aerospace, is now more open to the deal, which would create the world’s third-largest aerospace supplier.
“The combination with Safran will lead to the creation of a world leader, with a high technological know-how, able to shape the future of aerospace . . . It represents a new step in the consolidation of the aerospace industry,” he said.
Zodiac is now “receptive to any offer that is in the interests of the company” he added.
The combined group will have about 92,000 employees, with half of them in France, more than 20 billion euros in annual revenue and recurring operating income of 2.7 billion euros, Safran said.
Some analysts have dubbed the move as risky, as Zodiac recovers from a three-year crisis which led to the delay of Airbus and Boeing jet deliveries from its factories.
Safran Chief Executive, Philippe Petitcolin said he is not worried about Zodiac’s recovery from recent production and quality problems and has pledged not to let the deal distract Safran from the development of new ‘LEAP’ engines for Airbus and Boeing.
Under the deal, Safran will launch a cash offer worth 29.47 euros per share, a 26 percent premium to Wednesday’s Zodiac closing price of 23.31 euros.
“The acquisition of Zodiac Aerospace represents a unique opportunity at this point in Safran’s development, just a few months after initiating the refocus of the group on our core activities of aerospace and defence.” said Philippe Petitcolin.
This potential deal is the latest in France just months before the Presidential election in April and May this year.
Zodiac shares jumped by 23 percent when trading opened in Paris. Safran gained 0.7 percent.