Aerospace-and-defense manufacturer Esterline Corporation has entered into exclusive negotiations with Sagard Private Equity Partners and other shareholders to acquire 100 percent of the Souriau Group. Souriau manufactures engineered connectors for harsh environments and serves the aerospace, defense, power-generation, rail and industrial-equipment markets.
In a statement, Esterline said it has agreed to pay US$715 million at current exchange rates for Souriau. It intends to finance the acquisition through cash and international debt. It expects the sale to be completed in July.
Souriau, based in Versailles, France, has operations in six country an more than 2,300 employees. It anticipates sales of US$350 million for the 12-month period ending June 2011. Esterline pointed out that Souriau operates with solid profit margins, expecting an EBITDA of US$64 million, which is a margin of 18 percent, for the June 30, 2011 year-end. Also in the statement, Esterline said that aeronautics accounts for approximately 35 percent of Souriau's business, while defense and space represents approximately 30 percent, power generation and rail account for 15 percent, and industrial makes up 20 percent.
Souriau's chief executive officer Francois Calvarin said, "We view this as an enabling transaction and believe that we will become a stronger company as part of Esterline. While we have already made the necessary operational investments to support our growth plan, we believe that our ability to penetrate the U.S. marketplace, which currently represents less than a third of our revenues, will be greatly enhanced. We also believe that, in a similar fashion, we can assist the balance of Esterline's business in targeting the European market, where we derive nearly 60 percent of our revenues."
Esterline has posted a PowerPoint presentation detailing the transaction on its website. You can see it here.
