Airbus to exclude border security unit in defence electronics sale
18 February 2016
European aerospace and defence giant Airbus Group has excluded its border security business from the planned sale of its defense electronics unit, defense and space workers at Airbus were told, Reuters today reported.
The company had planned to sell defence electronics and border security units as one package, but its aim of concluding a deal by early 2016 is due to delays with a border project in Saudi Arabia, according to a letter to staff, the report said.
"For this reason, Airbus Defence and Space has decided to remove the Border Security business from the joint package and to retain it within Airbus Defence and Space," Bernhard Gerwert, the unit's CEO, said in the letter, seen by Reuters.
Airbus Group was to identify a buyer for its defence electronics unit by the end of last year, as part of the group's restructuring plan to place its ailing defence business on a strong footing.
Potential buyers included German defence group Rheinmetall teaming up with US private equity giant Blackstone, private equity majors Cinven, Carlyle and KKR, and also French defence electronics giant Thales group.
Airbus Group short-listed Carlyle and KKR for the defence electronics unit, after they tabled a higher bid than others, Reuters had reported in December, citing three people familiar with the matter.
Airbus Defence & Aerospace was formed in January 2014 during the corporate restructuring of European Aeronautic Defence and Space (EADS), and comprises the former Airbus Military, Astrium, and Cassidian divisions.
The business comprises military aircraft, communication satellites and systems and electronic systems. In 2014, the group declared core activities of the division to be rocket launchers and satellites, fighter aircraft and missiles.
The defence electronics unit makes components for radars, optronics, electronic warfare and border control applications, which are used in surveillance or for equipment used by pilots to fly at night or in fog conditions.
The unit has about €100 million in annual earnings before interest, taxes, depreciation and ammortisation on €1 billion in sales, according to Reuters.
The defence electronics arm has been valued at up to €1.3 billion ($1.5 billion) but excluding the border security unit will not lower the price, since the unit has been losing a high double-digit million euro amount each year and its enterprise value is zero at best," the report said.