Britain’s Cobham yesterday said it is offering $428.3 million to acquire the rest of a Danish satellite communications (SatCom) firm that it currently holds a minority stake in.
The offer for Thrane & Thrane A/S is the upper limit Cobham said it would pay to entice the Danish company’s investors to sell their shares unless another party comes forward with a competing offer. While Cobham would like to acquire the shares in Thrane & Thrane that it doesn’t own, the company said it would be satisfied with a controlling interest, or 50.1 percent.
For Cobham the acquisition would more than double its business in the SatCom arena. The company currently does about $158.7 million in SatCom business annually while Thrane and Thrane does about $200 million.
For the nine-month period ended in January 2012, Thrane & Thrane’s revenues were derived primarily from maritime customers, 58 percent, with land systems a distant second at 22 percent. Aeronautical customers account for 12 percent of the company’s business and earth stations 8 percent.
In briefing slides that were part of a investor presentation Cobham made yesterday regarding its voluntary offer for Thrane & Thrane, the company said the deal would complement its existing maritime, land and airborne positions in the SatCom market and have little overlap. Cobham also said that the transaction would create the world’s leading SatCom antennas systems business offering a comprehensive range of products and services.
For both Cobham and Thrane & Thrane, their SatCom businesses serve both commercial and defense markets. SatCom is a market that Cobham believes has room for high growth.
Last week, Cobham announced that it had acquired a nearly 26 percent stake in Thrane & Thrane, up from nearly 3 percent that it had already owned (Defense Daily, April 6). It said at the time that it would keep its options open regarding Thrane & Thrane.
Cobham’s offering price is a 43 percent premium to Thrane & Thrane’s closing stock price on Feb. 24, the last date of trading before the Danish firm announced it had received an unsolicited offer to buy the company. Once Thrane & Thrane made the announcement, its stock price shot up.
Cobham withdrew its earlier offer after Thrane & Thrane’s board said it would not recommend the deal. Under the new proposed offer, once the terms are published, which is expected next week, Thrane & Thrane’s shareholders will have four business weeks to sell their shares. If Cobham doesn’t acquire a controlling interest at the end of that time, it can extend the offer an additional six weeks.
Cobham said in its investor presentation that if it acquires the full stake in Thrane & Thrane, it would transfer management responsibility for its largest SatCom business unit, California-based Sea Tel, to the Danish firm.
Cobham expects the acquisition, if it goes through, to be moderately accretive to earnings this year.