- Title: France's Safran launches $9 billion agreed bid for Zodiac Aerospace
- Date: 19th January 2017
- Summary: PARIS, FRANCE (JANUARY 19, 2017) (REUTERS) ****WARNING CONTAINS FLASH PHOTOGRAPHY*** ZODIAC CEO OLIVIER ZARROUATI (RIGHT) SHAKING HANDS WITH SAFRAN CEO PHILIPPE PETITCOLIN (LEFT) SCREEN READING (English): "SAFRAN AND ZODIAC AEROSPAVE: A NEW GLBAL LEADER IN AEROSPACE VARIOUS OF SAFRAN CEO PHILIPPE PETITCOLIN SPEAKING TO REPORTERS (SOUNDBITE) (French) SAFRAN CEO, PHILIPPE PETITCOLIN, SAYING: "There is, on our side - it's a very important point - enough talent to be able to answer to our own needs of programme development such as the LEAP (programme) and also of course if need be to help the former of Zodiac activities, if we all agree, in order to speed up the performance level as it should be." PETITCOLIN TALKING TO PEOPLE AFTER PRESENTATION PEOPLE INSIDE CONFERENCE HALL AFTER NEWS BRIEFING ZODIAC CEO OLIVIER ZARROUATI TALKING TO PEOPLE (SOUNDBITE) (French) ZODIAC CEO, OLIVIER ZARROUATI, SAYING: "What airlines are fighting for, its daily battle in the competitive market, is no longer about what kind of plane it flies. It is now on how the plane is developed, what the cabin has to offer, in the services the airline has to offer to its clients. The cabin is the interface between the company and the passenger, it's the aircraft's goal." ZARROUATI TALKING ON THE PHONE (SOUNDBITE) (French) ZODIAC CEO, OLIVIER ZARROUATI, SAYING: "What Zodiac brings to Safran and what we are going to show together is to be at the centre of what a client thinks of the plane. I think that's a very exciting challenge that we are going to tackle together." ZARROUATI ON PHONE
- Embargoed: 2nd February 2017 14:12
- Keywords: Zodiac Safran aerospace bid Airbus Boeing
- Location: PARIS & VILLAROCHE, FRANCE/ UNIDENTIFIED LOCATION/ COMPUTER GRAPHICS
- City: PARIS & VILLAROCHE, FRANCE/ UNIDENTIFIED LOCATION/ COMPUTER GRAPHICS
- Country: France
- Topics: Company News Markets,Economic Events
- Reuters ID: LVA0015ZQZ9DZ
- Aspect Ratio: 16:9
- Story Text:French aero engine maker Safran on Thursday (January 19) launched a $9 billion (7.3 billion pounds) agreed bid for seats manufacturer Zodiac Aerospace to create the world's third-largest aerospace supplier as the industry bulks up to tackle record high output plans.
The deal comes three months after Zodiac's rival B/E Aerospace agreed to be absorbed by Rockwell Collins and six years after Zodiac's family shareholders rejected an approach from Safran, branding it "opportunistic".
The two have frequently been linked as suppliers combine technologies and services to support rising aircraft production. However, some analysts have warned such a tie-up is risky as Zodiac recovers from a nearly three-year crisis in its factories that delayed Airbus and Boeing jet deliveries.
Safran Chief Executive Philippe Petitcolin said he was not worried about Zodiac's recovery from recent production and quality problems in its U.S. seat manufacturing plants and pledged not to let the deal distract Safran from development of new 'LEAP' engines for Airbus and Boeing.
"There is, on our side - it's a very important point - enough talent to be able to answer to our own needs of programme development such as the Leap (programme) and also of course if need be to help the former Zodiac activities, if we all agree, in order to speed up the performance level as it should be," he told reporters.
Zodiac has persistently vowed to stay independent and scoffed at Safran's original approach in 2010, saying any tie-up would offer "very slight" synergies.
But after a series of profit warnings, Chief Executive Olivier Zarrouati said last March that Zodiac would be "receptive to any offer that is in the interests of the company".
Zarrouati believes airlines and customers are paying more and more attention to the quality inside the planes rather than what type of aircraft is being used.
"What airlines are fighting for, its daily battle in the competitive market, is no longer about what kind of plane it flies. It is now on how the plane is developed, what the cabin has to offer, in the services the airline has to offer to its clients. The cabin is the interface between the company and the passenger, it's the aircraft's goal," he said.
Airbus said this month there were still some difficulties in cabin supplies for the A350, whose deliveries have been partly held up by problems with toilets supplied by Zodiac. Zodiac says it is on course for recovery.
Petitcolin said synergies could far exceed an initial estimate of 200 million euros annually. He declined to give details of the impact on jobs or other cost savings.
Under the two-part 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 initial offer values Zodiac at just over 8.5 billion euros ($9 billion), based on Thomson Reuters data.
Zodiac shares jumped by 23 percent when trading opened in Paris in what could be their best performance in 30 years. Safran gained 0.7 percent.
Zodiac's controlling family shareholders would not take up this part of the offer, but would instead fold their shares into a subsequent merger between the two companies, based on 0.485 Safran shares for each Zodiac share.
In addition, Safran's existing shareholders would receive a special dividend of 5.5 euros per share, worth a total of 2.3 billion euros, before the deal goes ahead.
The companies said the combination would boost earnings per share from the first full financial year.
Zodiac Aerospace is controlled by a group of families that owns 23.8 percent of the stock and 36.6 percent of the voting rights and an arm of the Peugeot family, which owns 5.2 percent of the shares and holds 7.3 percent of the voting rights.
The French state owns 14 percent of Safran and will remain a shareholder of the combined group under a pact with other core shareholders. - Copyright Holder: REUTERS
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