Airbus is selling its German defence electronics arm to private equity firm KKR, 18 months after first putting it up for sale, in a deal that values the military business at €1.1bn including debt.
The European aerospace group will retain a 25 per cent stake in the company, which may have helped to reassure the German government. Berlin has been closely involved in the disposal, according to people close to the process. Airbus will hold the stake for a maximum of three years, a company spokesman said.
The disposal of the business — which makes mission critical sensors and provides services for defence applications — has been highly sensitive in Germany, as the German Ministry of Defence is its biggest single customer. The government has also been concerned about the impact of a sale on jobs. Reflecting these concerns, Johannes Huth, head of KKR Europe, Middle East and Africa, said KKR would support the company with its “extensive experience building successful industrial companies in Germany, such as MTU Aero Engines, Demag Cranes and Kion”.
Conclusion of the sale marks a significant milestone in Airbus’s plan to restructure its defence and security division. Tom Enders, Airbus chief executive, in 2014 announced plans to sell businesses with revenues of €2bn to focus defence and space operations on military aircraft, missiles and satellites. The defence electronics arm employs about 4,000 people worldwide, generated sales of roughly €1bn last year and operating margins of about 10 per cent. The deal is expected to close in the first quarter of next year.
Airbus is still in negotiations to sell its 49 per cent stake in a German submarine systems business jointly held with ThyssenKrupp, called Atlas Elektronik. The group paid an estimated €60m for the stake in 2005, beating off fierce competition from Thales, the French defence electronics group. Thyssen has first right of refusal on the stake. Airbus is also seeking to sell its professional mobile communications business.
Finally, Airbus will eventually put its border security division back on the block, having withdrawn it from sale because of concerns from customers in the Middle East about existing delays on contracts.