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29 Sep 16. Safran in exclusive talks to sell security operations in €2.4bn deal. Safran, the French engine-maker that has been looking to slim down and focus on its aerospace and defence businesses, is in “exclusive” talks to sell its identity and security (I&S) operations in a €2.4bn deal after receiving an approach from US private equity group Advent International.
Advent’s various global investments include Oberthur Technologies, a French group that provides smartcard technology and works on “identity solutions” for sectors including telecoms, banking and the public sector.
Safran said the talks with Advent revolve around combining its I&S operations with Oberthur to create a company that would have joint revenues of €2.8bn. It insisted the headquarters of a combined company would remain in France, as would “leading” research and development activities and “key” production capacities.
“This transaction would bring to Safran I&S further capacity to meet customers’ requirements at a time when security in the digital world and emerging needs for public security are major challenges. The complementarity of Safran I&S’ strengths with Oberthur Technologies would create a common, coherent and strong business combination to the benefit of employees,” Safran said in a statement.
Bpifrance, the French state-backed investor, would take a stake in the enlarged company and have representation on the board, Safran said in an early attempt to avoid a potential backlash about the takeover of French assets that may be viewed as strategically important.
Safran said the deal under discussion would value its I&S operations at €2.4bn. A deal would be expected to close next year and would result in a pre-tax capital gain for Safran, the company said.
Philippe Petitcolin, Safran’s chief executive, said:
We examined all the options with the objective of providing new development prospects for Safran’s Identity and Security activities in a world in which digitalization and connectivity are accelerating. Their best-in-class technologies and world-leading positions are complementary to Oberthur Technologies and their combination will create a world champion in the technology, industrial and commercial domains. (Source: FT.com)
28 Sep 16. Smiths Group margins pinched by energy price slump. Tough conditions in global energy markets led to a fall in profit margins at UK engineering conglomerate Smiths Group, which makes products from X-ray scanners to industrial valves. The FTSE 100 group posted a 6.5 per cent rise in pre-tax profit to £346m due to lower one-off costs, such as write-downs and litigation costs, in the year ended 31 July, reports Michael Pooler. But fewer orders of new equipment from customers in the hydrocarbons sector dragged on operating margins, which decreased 30 basis points to 17.3 per cent. Chief executive Andy Reynolds Smith, who has been in the job for a year, signalled that Smiths would expand its oil and gas products division, John Crane, further into other areas such as the chemical, pharmaceutical, and pulp and paper industries.
He said: We anticipate a broad continuation of the trends experienced in 2016, with ongoing challenges in John Crane’s end markets being more than offset by moderate underlying revenue growth in our other divisions.
Smiths was long viewed by the City as a potential break-up target, but Mr Reynolds Smith has already said his goal is to build the company.
He used his first full-year results to outline his vision of turning the 165-year-old firm, which started out as a jewelry shop and played a part in the first test-tube baby, into “one of the world’s leading technology companies”.
Investors will be keen to learn more details. In Apri