Eaton to sell two aerospace businesses to Safran

Power management company Eaton has entered into an agreement to sell its Aerospace Power Distribution Management Solutions and Integrated Cockpit Solutions business to Safran for $270 million. The transaction is expected to close in the first half of 2014 and is subject to Eaton Board approval, regulatory approvals, and satisfaction of other customary closing conditions.

 

“The sale of this business is consistent with Eaton's long-term strategy to grow the aerospace business by focusing on its core competencies of hydraulics, fuel, conveyance, motion control, and engine solutions, areas where we are an industry leader,” said Uday Yadav, president, Eaton’s Aerospace Group.

 

The Aerospace Power Distribution Management Solutions and Integrated Cockpit Solutions business employs approximately 350 people at manufacturing facilities in Costa Mesa, Calif. and Sarasota, Fla. The business produces illuminated switches, cockpit panel assemblies, pilot controls, and passenger safety unit latches, as well as circuit protection, power distribution and switch components, and sub-systems for aerospace and industrial applications. Sales were approximately $102 million in 2013.

 

The acquisition of the Aerospace Power Distribution Management Solutions business brings key contactor and circuit breaker technologies to Safran. As the continuation of Safran’s strategy addressing the market for “more electric aircraft”, it reinforces Labinal Power Systems, which consolidates the group’s electrical power activities.

 

The acquisition of the Integrated Cockpit Solutions business allows Safran to bolster Sagem’s offering and North-American presence in avionics and flight controls, bringing recognized expertise in panels and displays.

 

The business holds strong market positions in commercial (regional, short-to medium-haul, long-haul), business and military aviation. The business generated revenues of more than $100 million and EBITDA in excess of $14 million in 2013. Aerospace Power Distribution Management Solutions account for around 60% of the activity, and Integrated Cockpit Solutions around 40%. The aftermarket (spares) business should contribute approximately 25% of overall revenue. 

 

“Further to Safran’s decisive step into onboard power generation with the breakthrough acquisition of Goodrich Electrical Power Systems in 2013, Eaton Aerospace Group’s electrical distribution activities are a key addition bringing us comprehensive expertise over the overall electrical energy chain. Labinal Power Systems, a new Safran entity formed at the beginning of the year, affirms its position as an essential player and a world leader in electrical power systems. In addition, the acquisition of the Cockpit Integration Solutions activities will reinforce Sagem’s commercial presence in the US,” declared Jean-Paul Herteman, Safran chairman and CEO.

 

The cash consideration for the transaction amounts to $270 million, of which an enterprise value of $224 million and future tax savings of $46 million arising from the amortization for tax purposes of goodwill and other intangible assets acquired.

 

The Aerospace Power Distribution Management Solutions activities will be consolidated within Safran’s aircraft equipment business. The Integrated Cockpit Solutions activities will be consolidated within the defense business.

 

Eaton, which acquired Cooper Industries plc in November 2012, posted revenues for that year for the combined companies of $21.8 billion on a pro forma basis.