Safran to Sell Biometrics Arm to Advent for $2.7 Billionby and
Unit will be combined with U.S. firm’s own Oberthur operation
Government fund to stake in combined entity after transaction
Safran SA is in talks to sell its identity-verification operations to U.S. private-equity firm Advent International Corp. for 2.43 billion euros ($2.7 billion) as the French maker of jet engines and space launchers narrows its focus to aerospace and defense.
The deal would unite Safran’s biometric identification technology with the security-software activities of Advent’s Oberthur Technologies, creating a business with 2.8 billion euros in annual revenue.
Advent submitted a firm and irrevocable offer for the Safran operations and the companies are in exclusive talks, according to a statement from the engine maker, which has been seeking a sale for months. The bid was higher than one from Gemalto NV, a Dutch designer of software for e-identity documents and chip payment cards, while three buyout firm-led groups also made offers, people familiar with the matter said last week.
A combination of the Safran business, which was formerly known as Morpho and counts governments and police forces among its clients, with Oberthur, which provides payment-security services to banks and other financial institutions, would be “uniquely positioned to accelerate the convergence between government and commercial markets,” Advent said in a statement.
In a letter to the French government obtained by Bloomberg, Advent and Oberthur pledge to keep jobs in France for at least two years, and to list the merged entity on the Paris stock exchange in the medium term. BPIFrance, the government’s investment fund, also plans to take a stake in the combined business and will join the board.
Shares of Safran, which is partnered with General Electric Co. in the CFM International aero-engine venture, rose as much as 1.4 percent and traded 0.3 percent higher at 64 euros as of 4:34 p.m. in Paris. Gemalto fell 6.6 percent in Amsterdam and was later priced 4.5 percent lower at 57.02 euros.
Safran, which was advised on the deal by Lazard and Societe Generale, said it will be submitted to employee bodies and is expected to close in 2017, assuming regulatory approval in Europe and the U.S.
The aerospace company has itself been linked to a bid for French aircraft-seat manufacturer Zodiac Aerospace SA, with Zodiac’s stock jumping the most on record on June 15 after a report that it could attract a 10 billion-euro offer. Zodiac later told Bloomberg no proposal has been received.