The Safran acquisition of Collins Aerospace’s flight control activities is expected to generate sales of approximately $1.5 billion and an EBITDA of $130 million in 2024.
Safran, a leading aerospace and defense company, has announced its intention to acquire Collins Aerospace’s high-technology actuation and flight control activities. These mission-critical functions are essential for both commercial and military aircraft, as well as helicopters. The business operates across eight facilities in Europe (France, UK, and Italy) and Asia, with approximately 3,700 employees. It also possesses valuable maintenance, repair, and engineering capabilities. The acquisition is expected to generate sales of approximately $1.5 billion and an EBITDA of $130 million in 2024.
The transaction is also projected to generate approximately $50 million in annual pre-tax run-rate cost synergies, with implementation expected from 2025 to 2028. These synergies will arise from various factors, including economies of scale in procurement, R&D complementarity, and internalization of sourcing and production flows. Additionally, the deal is anticipated to bring commercial synergies through integrated offerings and diversification of customers and geographic mix. Post 2028, commercial synergies are expected to continue, with achievements on next-generation aircraft by the mid-2020s.
Olivier Andriès, Chief Executive Officer, Safran said, “The contemplated transaction represents a unique opportunity to develop our position in mission critical actuation and flight control functions. Our highly complementary product offerings would create a global leader in these segments with around $1.8 billion of sales. The transaction would enable us to deliver a comprehensive offering to our clients and position us extremely well for next-generation platforms as the segments move toward increased electrification. The business is a perfect fit with both our product portfolio and our DNA with leading technologies, recurring aftermarket sales, and profitable growth.”
The enterprise value of the acquisition amounts to $1.8 billion, representing a multiple of approximately 14x pre-cost synergies and 10x post run-rate cost synergies based on 2024E EBITDA. The transaction is expected to have an attractive impact on Safran’s earnings per share from the first year. Long-term supply agreements covering approximately 25% of sales are expected to be secured between Safran and Collins under attractive terms. The acquisition will be financed with available cash and have a limited impact on Safran’s net leverage, reinforcing the company’s commitment to its robust investment-grade rating.
The strategic benefits of the transaction for Safran include highly complementary product offerings, synergetic exposure across commercial and military aircraft, and helicopter segments. The deal also provides complementary capabilities in hydraulic and electromechanical actuation, positioning Safran well for next-generation aircraft. Furthermore, the acquisition offers attractive exposure to valuable and recurring aftermarket revenue streams, a significant portion of which comes from aftermarket sales. The transaction is expected to drive compelling value creation, supported by short to medium-term cost synergy potential.
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The contemplated acquisition is subject to customary regulatory approvals, closing conditions, and the information and consultation procedure with the relevant employee representative bodies of Collins and Safran. The closing is anticipated to take place in the second half of 2024. With this acquisition, Safran aims to strengthen its position as a global leader in the aerospace industry and capitalize on the transformative potential of Collins Aerospace’s actuation and flight control activities for the benefit of the industry and its clients.
