Too attractive by half

19 January 2017 By Olaf Storbeck

The French group’s $10 bln offer for the plane-parts maker only flies if most shareholders take cash, leaving shares for Zodiac’s controlling families. There’s a wrinkle: the strategic logic, and Safran’s superior performance, make the stock alternative appealing to others too.

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French aerospace supplier Safran on Jan. 19 announced a takeover bid for aircraft seat maker Zodiac Aerospace, valuing the target at 9.7 billion euros including debt. Zodiac’s supervisory board is backing the proposed merger.

Safran is offering 29.47 euros in cash per Zodiac share, a 26 percent premium to its closing price on Jan. 18. The target’s investors also have the option to take 0.485 new shares in Safran. The deal only goes through if 50 percent of Zodiac’s investors take the cash.

A group of family shareholders and institutional investors, who jointly hold 32 percent of the group’s share capital, have already decided to take shares rather than cash. Before the deal closes, Safran will pay a special dividend of 5.50 euros per share – 2.3 billion euros in total – to its own investors.

The combined company would have 21 billion euros in joint revenue. Safran says it expects the merger to generate annual cost synergies of around 200 million euros within three years.

Shares in Zodiac were up 22 percent to 28.35 euros by 0945 GMT on Jan. 19. Shares in Safran rose 1.9 percent to 68.55 euros.

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