Cobham Planning Further Disposals After Biggest-Ever Purchase

Cobham Plc is continuing to slim down its range of businesses after completing two disposals last week as the U.K. manufacturer of aerospace and defense technology works to integrate its biggest-ever takeover deal.

Two units acquired with the $1.46 billion purchase of Aeroflex Holding Corp. last year were offloaded for $80 million earlier this month and Wimborne, England-based Cobham is assessing which other operations it should exit, said Robert Mullins, who has responsibility for mergers and acquisitions.

“We’re taking the opportunity to identify non-core assets that might belong in someone else’s portfolio,” Mullins said in an interview at the Paris Air Show. “After a big acquisition you have the ability while you’re digesting what you just acquired of taking a hard look at what you already have.”

Last September’s purchase of Plainview, New York-based Aeroflex, a maker of microwave components and semiconductors for wireless communication that derives 70 percent of sales from high-growth commercial markets, dilutes Cobham’s reliance on a stuttering defense market. Since that deal, M&A is less of a priority as the company seeks to pare the number of years it would take to repay total debt, a measure of corporate risk.

‘Strategic Action’

“Investors like to see companies take strategic action to shape their portfolios and that’s what we’re doing,” Mullins said. “There are businesses that are high quality businesses, but they might be more valuable to other people.”

Cobham, whose businesses span avionics, aircraft refueling gear, antennas, electronic warfare technology and life-support systems, has conducted two strategic reviews since November as it narrows its role in the defense supply chain.

The assets of Aeroflex that Cobham sold this month to Orlando, Florida-based API Technologies Corp. were Weinschel Inc. and Inmet Inc., two manufacturers of radio frequency and microwave components and sub-systems.

Weinschel of Frederick, Maryland, had already been earmarked for disposal by Aeroflex before its purchase for $920 million in cash plus $540 million of debt, and Cobham decided to go ahead and include Inmet of Ann Arbor, Michigan.

“They didn’t have the same DNA as we did, they were much more of a high volume, piece parts business,” Mullins said. “That’s not Cobham, so we elected to part with it.”

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