05 Jul 12. GKN plc announced its agreement to acquire Volvo Aero (the aero engine division of AB Volvo). Volvo Aero designs, engineers and manufactures components and sub-assemblies for aircraft engine turbines. It supplies all the major aero engine manufacturers and has positions on most major civil aerospace platforms that are set to increase as aircraft build rates ramp up. Volvo Aero employs some 3,000 people based in Sweden, Norway and the USA.
Nigel Stein, Chief Executive, GKN plc, said, “This is a highly attractive acquisition for GKN creating a market leader in aero engine components. With excellent technology and strong life-of-programme positions on most civil aero engines, Volvo Aero will significantly enhance GKN Aerospace’s engine components business.”
The acquisition enterprise value is SEK6.9bn (£633m) comprising
SEK5.6bn (£513m) of equity value (consideration) together with an anticipated Volvo Aero pension settlement (£50m) and working capital refinancing (£70m). The acquisition is expected to complete during the third quarter, subject to regulatory approvals. It will be funded by new debt and a £140m placing of new ordinary shares, representing approximately 5% of GKN’s current market capitalisation. For the year ended 31 December 2011, AB Volvo reported audited results attributable to Volvo Aero of sales of SEK6.5bn (£600m), EBITDA of SEK0.8bn (£75m), EBIT of SEK0.3bn (£30m) and gross assets of SEK9.3bn (£855m). In 2012, GKN expects Volvo Aero’s sales to be around SEK7.3bn (£670m) with EBITDA anticipated to be approximately SEK1.1bn (£100m). The acquisition enterprise value equates to an expected 2012 sales multiple of 0.9 times and an expected Volvo Aero 2012 EBITDA multiple of 6.3 times. In 2013, the first full year of ownership, the transaction is expected both to be enhancing to GKN’s earnings per share on a management basis and to generate a return on invested capital that exceeds the Group’s pre-tax weighted average cost of capital of 12%. The Volvo Aero operating margin is expected to meet the GKN Aerospace target range of 11-13% in 2013 due to operational process improvements and cost savings, which are expected to total 3-4% of Volvo Aero sales by 2014. The combination of GKN Aerospace and Volvo Aero creates a world leader in both aero structures and aero engine components. Within aero engines, GKN’s composite leadership together with Volvo Aero’s strong metallic technology provides a unique offering to customers who are focused on lightweight, high performance engine solutions. Volvo Aero has strong life-of-programme positions on existing platforms and a pipeline of new technology, offering a long-term revenue stream and opportunities for growth. This transaction supports the growth strategy of GKN Aerospace, increasing its pro forma 2011 sales to more than £2bn, of which two thirds would have been to the civil aerospace market. On the same pro forma basis, GKN Aerospace would have represented around 31% of GKN Group sales and 37% of Group trading profit. (Source: ASD Network)
02 Jul 12. Rohde & Schwarz has added a top technology player to its roster of companies with the addition of Rohde & Schwarz DVS GmbH. Located in Hanover, Germany, the company is a pioneer in the manufacture of digital video systems and storage solutions for the film and TV industry. The applications for DVS technology range from the production of TV series and Hollywood blockbusters to the creation of 4K films for digital cinema. For nearly six decades, Rohde & Schwarz has been a market leader in broadcast transmission and T&M equipment. To better serve the market with both Rohde & Schwarz and DVS products, the two companies are combining their sales activities. As a result, DVS products to be developed in the future will also be marketed in over 70 countries via the worldwide Rohde & Schwarz sales network.
02 Jul 12. Shephard Media, the internationally renowned aerospace and defence business-to-busine