Aerospace Firm Safran Cuts Zodiac Bid -- WSJ
May 25 2017 - 3:02AM
Dow Jones News
By Robert Wall and Ben Dummett
French aerospace supplier Safran SA on Wednesday said it cut its
bid price for Zodiac Aerospace SA about 15% to EUR7.3 billion ($8.2
billion) after renewed profit headwinds came to light at the
beleaguered plane cabin-interior specialist.
Safran in January announced a plan to buy Zodiac Aerospace to
become the world's No. 3 aerospace supplier to Boeing Co. and
Airbus SE behind United Technologies Corp. and General Electric
Co.
The deal quickly drew fire from hedge fund TCI Fund Management,
which said Safran was overpaying. TCI urged Safran to abandon the
deal and attacked the complicated transaction that it said gave
preferential treatment to the Zodiac's family shareholders and two
institutional investors in the company.
Safran said in March that it was reviewing its offer after
Zodiac issued a profit warning amid new problems in its
seat-building business. The company already had been struggling to
produce business class seats for Boeing and Airbus and other cabin
interior items, such as toilet doors.
Safran on Wednesday said it would pay EUR25 a share for 100% of
Zodiac shares. Safran originally had said it would pay EUR29.47 a
share for Zodiac in a tender offer.
It also adjusted other elements of the complex deal.
The new structure offers an alternative to the cash offer for
some Zodiac shares. Safran is offering preferred shares in exchange
for Zodiac stock in a structure with an implied value of around
EUR24 for each Zodiac share. This component is capped at 31.4% of
Zodiac's total outstanding the stock. The preferred shares carry
the same rights as ordinary shares but have to be held for at least
three years after the completion of the tender offer.
The deal's completion is in part contingent on 50% of Zodiac
shares with voting rights being tendered.
To placate investors such as TCI who were looking for Safran to
return more capital to shareholders, Safran said if the deal goes
through it would undertake a EUR2.3 billion share buyback over two
years.
Write to Robert Wall at robert.wall@wsj.com and Ben Dummett at
ben.dummett@wsj.com
(END) Dow Jones Newswires
May 25, 2017 02:47 ET (06:47 GMT)
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