Safran Group expects that the acquisition of Collins Aerospace’s actuation and flight control division from RTX will generate €1.5 billion in additional sales and contribute some €340 million to the pre-tax operating result (EBITDA). Safran and RTX, formerly known as Raytheon Technologies, have agreed on the deal, but closing is not expected until after regulatory approval in HY2 of 2024. Safran is keen to add Collins Aerospace actuators to its business.
The agreement includes the activities of Collins Aerospace for actuation and flight control systems for commercial, business, and military aircraft as well as for helicopters and missiles. Actuators and control systems can be found on primary flight control systems like spoilers and stabilizers or in secondary systems for flap actuators or wing tip brakes. They are used on current in-production Airbus A220, A320neo family, and A350 aircraft and on the Boeing 787, plus on a range of older-generation airliners.
Hydraulic or electric trust-reverse actuation systems and power door openings of nacelles also use Collins’s systems. In helicopters, the actuators are used on the main and tail rotors, while they are part of the (fly-by-wire) flight control systems on fighter jets.
The division employs 3.700 staff
The actuation and flight control division of Collins Aerospace employs 3.700 staff across eight facilities in the UK, France, Italy, and Indonesia. It includes MRO and engineering activities that should generate forty percent of aftermarket revenues. The deal includes long-term parts supply agreements. Sales in 2024 are estimated to be some $1.5 billion and EBITDA $130 million. Safran’s own Actuation business is expected to generate $300 million in sales. This would become $1.8 billion once the deal closes, of which 37 percent is from aftermarket activities.
According to Safran Group CEO Olivier Andries, the acquisition “represents a unique opportunity to develop our position in mission-critical actuation and flight control functions. (…) The transaction would enable us to deliver a comprehensive offering to our clients and position us extremely well for next-generation platforms as the segments move toward increased electrification. The business is a perfect fit with both our product portfolio and our DNA with leading technologies, recurring aftermarket sales, and profitable growth.“
Next-generation aircraft
Combined, Collins Aerospace and Safran’s own actuation and flight control activities make a highly-complimentary product offering in different segments. The French company is particularly interested in combining Collins’s hydraulic and mechanical systems with its own electrical systems on next-generation aircraft. Whereas current-generation commercial aircraft have only ten percent electric actuators, Safran says this will grow to fifty percent on next-generation aircraft. This could become even ninety percent on aircraft designs by the middle of this decade.
Safran has not disclosed how much it will pay RTX in a transaction that will be fully financed by cash in hand. But it says that the Collins Aerospace division has an enterprise value of $1.8 billion. This implies “a multiple of ~14x pre-cost synergies and ~10x post-run-rate cost synergies based on 2024E EBITDA, with an expected IRR and ROCE 2028E of the transaction exceeding the Group’s WACC and with an accretive impact on Safran earnings per share from year one.”
Pre-tax run-rate synergies should deliver around €50 million in annual cost savings between 2025 and 2028, notably through economies of scale in procurement and R&D, sourcing, and production flows. Last September, Safran announced that it planned to acquire the avionics division of Thales.
