KKR to Buy Airbus Defense Electronics Unit for $1.2 Billion

  • Planemaker is reorganizing its military and space operations
  • Deal expands KKR's aviation reach after helicopter investment

Buyout firm KKR & Co. agreed to buy Airbus Group SE’s defense electronics business for 1.1 billion euros ($1.2 billion) as the European planemaker reorganizes its military and space operations.

Airbus said it may keep a minority stake in the unit during the transition, according to a company statement Friday. The deal, which requires regulatory approval, is expected to close in the first quarter of next year, Airbus said.

The KKR pact, part of an overhaul announced more than a year ago, “is an excellent outcome,” Bernhard Gerwert, chief executive officer of Airbus’s defense and space division, said in the statement. The acquisition extends KKR’s reach into aviation, following an investment of more than $100 million in 2014 in the helicopter unit of Lease Corporation International.

Airbus said in September 2014 it would scale back ambitions for its defense and space business to focus on military aircraft, missiles, space launchers and satellites. As part of the overhaul, the company said it would sell half a dozen businesses and cut thousands of jobs.

“There is a renewed effort to get some of those defense margins up,” George Ferguson, an analyst with Bloomberg Intelligence, said by telephone.

‘Growth Potential’

The defense electronics unit, which has about 4,000 employees, is profitable and has “significant growth potential” under the new owners, Gerwert said. The maker of sensors and systems for defense and security applications generates annual sales of about 1 billion euros.

KKR’s 2014 helicopter investment was designed to tap into growing demand for rotary-wing aircraft to serve offshore oil and gas platforms. The firm said it would foster expansion at the Airbus defense electronics business, which is based in Ulm, Germany.

“KKR will support the growth and development of the company with its financial resources, international network, long-standing expertise in the global industrial sector and its extensive experience building successful industrial companies,” Johannes Huth, head of KKR’s business in Europe, the Middle East and Africa, said in the statement.

The investment company fell 1.7 percent to $14.78 Friday in New York. Airbus rose 1.8 percent to 60.60 euros in Paris.

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