France’s Thales is set to make a bold move by acquiring Cobham Aerospace Communications, a French supplier, for a hefty sum of $1.1 billion. This exciting development has already caused a stir, with Thales shares jumping up by around 1% during early Paris trading.
Thales is motivated by its desire to reinforce its avionics portfolio, which comprises the intricate electronic systems found in aircraft. With this acquisition, they aim to establish a game changer in the rapidly growing market of communications and connectivity. Yannick Assouad, the Executive Vice-President of Avionics, expressed his enthusiasm, stating, “Thales will establish a game changer in the very attractive and fast-growing communications and connectivity market.”
Cobham Aerospace Communications holds a prominent position as a leading supplier of cutting-edge cockpit communication systems. Thales anticipates that the company will generate approximately $200 million in revenue in 2023, further enhancing Thales’ business prospects.
Market analysts at Jefferies view this acquisition as a positive step for Thales, praising the reasonable acquisition price. The transaction is predicted to deliver substantial growth for Thales, with double-digit figures expected annually in the medium term. Additionally, it is poised to have a positive impact on the company’s margins.
Not only will this deal boost Thales’ financial standing, but it will also be earnings per share accretive from the first year post-closing. Furthermore, it is anticipated to generate revenue synergies of about $40 million per year, solidifying Thales’ position in the market.
Thales plans to finance this acquisition through its available cash resources, ensuring a seamless integration of Cobham Aerospace Communications. The transaction is set to be finalized in the first half of 2024, ushering in a new era for both companies.
Exciting times lie ahead for Thales as they venture into new territories, fueling growth and innovation in the aviation industry. This strategic acquisition marks a significant milestone for the company, propelling them toward a promising future.
