France’s Safran Group on Monday confirmed a media report that it is in discussions to acquire a business of Raytheon Technologies [RTX] that supplies flight control and other actuators for commercial and military aircraft.
Bloomberg on Monday first reported the potential $1 billion deal, saying Safran is bidding against private equity firms for the Raytheon business.
The investment banking firm Jefferies and Co. on Monday said the Raytheon business is expected to generate about $1.3 billion in sales and generate $106 million in earnings before interest, taxes, depreciation and amortization in fiscal year 2024. The businesses’ products are on various Airbus and Boeing [BA] commercial planes as well as the V-22 tiltrotor, B-2 bomber, the Army’s Future Vertical Lift and other Army platform, the firm said.
Jefferies described the Raytheon business as low profit margin and low in aftermarket content, which fail to meet Safran’s criteria for acquisitions. The investment firm views these attributes of the actuation business as “potential negatives” for Safran, adding that spending on any acquisition will compete with the French company’s share repurchases.
Safran said that given it is in a bidding process for the Raytheon flight control and actuation business, “it is not possible to evaluate the chances of reaching any agreement, nor is it possible to be specific about terms and conditions.”
Raytheon Technologies in 2021 divested a global training business. The company is currently realigning its defense businesses.