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20 Dec 18. Airbus falls on report of DoJ corruption probe. Shares down more than 6% on concerns about investigation over use of agents. Shares in Airbus, the European aerospace and defence group, fell more than 6 per cent on Thursday morning following a report in France’s Le Monde newspaper that the US Department of Justice had officially opened an investigation into alleged corruption. Le Monde reported that Airbus was informed at the end of the summer about the investigation by the DoJ, adding to ongoing probes by Britain’s Serious Fraud Office and France’s Parquet National Financier into the alleged use of agents internationally. A spokesperson for Airbus declined to comment on the potential investigation but said: “Consistent with the company’s prior public disclosures, Airbus continues to co-operate with all relevant authorities, including the US Department of Justice, both in connection with Airbus’ findings concerning certain inaccuracies in filings made with the US Department of State . . . and in connection with conduct forming part of the SFO/PNF investigation that could fall within US jurisdiction”. The aerospace group, which is in the midst of a top-level revamp, has been dogged by a series of investigations into the use of middlemen to secure orders.
Tom Enders, Airbus long-serving chief executive, is due to retire from the group at the end of April. Airbus said in February this year that American authorities had asked for information to assess whether any of the alleged misconduct in the European investigations could fall within US jurisdiction. The company on Thursday stressed that the US was “of major importance to Airbus in terms of production facilities, employees and clients”. The company revealed in October 2017 it had breached US arms export regulations, admitting to inaccuracies in its disclosure over payments to middlemen. Airbus said at the time it had disclosed the inaccuracies voluntarily. The export rules are designed to give the US control over any sales to foreign armed forces of equipment that might contain sensitive technology. Under the rules, known as the International Traffic in Arms Regulations (Itar), companies must provide additional information on third-party agents used to win export deals of $500,000 or more. It is not clear which deals the inaccuracies related to. Senior executives have previously indicated the company hopes to avoid or defer prosecution in the UK and French inquiries by co-operating with authorities, as Rolls-Royce, the aero-engine group, did last year. (Source: FT.com)
15 Dec 18. Axelspace Garners Series B Funding. Axelspace Corporation (HQ: Tokyo, Japan; CEO: Yuya Nakamura) has completed their Series B funding round, raising approximately 2.58bn JPY ($22.8m). The round sees the allocation of new shares to the lead investor 31VENTURES – Global Brain – Growth I Joint Venture (managed by Mitsui Fudosan Co. Ltd. and Global Brain Corporation) and to several other venture capital and corporate investors.
With this critical step, Axelspace moves closer to the realization of the new generation Earth Observation (EO) infrastructure AxelGlobe, which will observe the entire planet every day, as was announced in December of 2015. The launch of the GRUS satellite, which had been postponed in 2017, will be performed this month (December, 2018). Moreover, the structure of the organization has undergone some changes in association with the funding event.
Accepting institutions
- 31VENTURES – Global Brain – Growth I Joint Venture (Managed by Mitsui Fudosan Co. Ltd. and Global Brain Corporation)
- Innovation Network Corporation of Japan (INCJ)
- Innovation Platform for The University of Tokyo (UTokyoIPC)
- SBI Investment Co. Ltd.
- The Dai-ichi Life Insurance Company, Limited
With the funding obtained in this round, Axelspace will develop two additional GRUS satellites for launch in 2020, which will increase the number of satellites for more frequent captures of Earth imagery. To tap into this valuable new resource, the company is preparing to begin large-scale collaboration with Mitsui Fudosan, also one of the lead investors. (Source: Satnews)
15 Dec 18. Italian firm Leonardo merges 3 divisions, names Brit to head them. Italy’s Leonardo has announced a major shakeup of its management structure, which will see three of its seven divisions merged and entrusted to one of the firm’s top British managers, Norman Bone.
Reporting to CEO Alessandro Profumo, Bone will oversee a new Electronics Division, into which its Land & Naval Defence Electronics, Airborne & Space Systems, and Defence Systems divisions will be merged.
Bone was previously the head of the Airborne & Space Systems division as well as chairman and managing director of Leonardo’s U.K. operation.
The Defense Systems division includes Leonardo’s torpedo business, formerly known as WASS, and its cannon business, formerly known as Oto Melara.
In a statement, Leonardo said the merging of the divisions was designed to “achieve suitable critical mass” in its electronics-related businesses.
“This evolution will result in the organizational model being aligned with that of the main players in the market, ensuring an even more integrated development,” the firm said.
Additionally, the firm’s Air Traffic Control and Automation Systems businesses will be moved from the firm’s Security & Information Systems Division to the new Electronics Division.
The remainder of the Security & Information Systems division has been renamed the Cyber Security Division, and will be taken over on Jan. 21 by Barbara Poggiali, the firm said.
Leonardo’s three other divisions are Helicopters, Aircraft and Aerostructures. The shakeup is the latest stage in the consolidation of Leonardo’s activities, which formerly existed as separate companies including AgustaWestland and Alenia. They were first transformed into divisions of the firm in 2016 as the company changed its name to Leonardo from Finmeccanica. (Source: glstrade.com/Defense News)
17 Dec 18. Embraer and Boeing Approved the Terms of Strategic Aerospace Partnership, Seek Brazilian Government Approval. Embraer [B3: EMBR3, NYSE: ERJ] and Boeing [NYSE: BA] have approved to the terms of a strategic partnership that would position both companies to accelerate growth in global aerospace markets.
The approved terms define the joint venture comprising the commercial aircraft and services operations of Embraer, in which Boeing will hold an 80 percent ownership stake and Embraer will hold the remaining 20 percent. The transaction remains subject to approval by the Government of Brazil, after which Embraer and Boeing intend to execute definitive transaction documents. The closing of the transaction will then be subject to shareholder and regulatory approvals and customary closing conditions.
Under the terms of the proposed partnership, Boeing will acquire an 80 percent ownership stake in the joint venture for $4.2bn. The partnership is expected to be neutral to Boeing’s earnings per share in 2020 and accretive thereafter. Estimated annual pre-tax cost synergies of approximately $150m are anticipated by the third year of operations.
Once the transaction has closed, the commercial aviation joint venture will be led by Brazil-based management, including a president and chief executive officer. Boeing will have operational and management control of the new company, which will report directly to Dennis Muilenburg, Boeing chairman, president and chief executive officer. Embraer will retain consent rights for certain strategic decisions, such as transfer of operations from Brazil.
“Boeing and Embraer know each other well through more than two decades of collaboration, and the respect we have for each other and the value we see in this partnership has only increased since we announced our joint efforts earlier this year,” said Dennis Muilenburg, Boeing chairman, president and chief executive officer.
“We are confident that this partnership will deliver great value to Brazil and the Brazilian aerospace industry as a whole. This alliance will strengthen both companies in the global market and is aligned with our long-term sustainable growth strategy,” said Paulo Cesar de Souza e Silva, Embraer president and chief executive officer.
The companies have also agreed to the terms of another joint venture to promote and develop new markets for the multi-mission medium airlift KC-390. Under the terms of this proposed partnership, Embraer will own a 51 percent stake in the joint venture, with Boeing owning the remaining 49 percent.
The transaction is subject to approval by the Government of Brazil, ratification by the Embraer Board of Directors and its further authorization to execute the definitive transaction documents. Once the parties have executed the definitive transaction agreements, the strategic partnership will then be subject to shareholder and regulatory approvals, as well as other customary closing conditions. Assuming the approvals are received in a timely manner, the transaction is intended to close by the end of 2019.
17 Dec 18. Australia finalises frigate contract with ASC Shipbuilding becoming a BAE Systems subsidiary. The Australian government has signed the head contract in support of the Royal Australian Navy’s (RAN’s) Sea 5000 programme to procure Hunter-class frigates from BAE Systems, it was announced on 14 December.
In announcing the deal, BAE Systems confirmed that ASC Shipbuilding, a division of state-owned ASC Pty Ltd, has become a company subsidiary. The transaction was a key part of the proposed deal to enable domestic capability development. BAE Systems was selected as preferred tenderer in the frigate programme, which is valued at AUD35bn (USD26bn), in June.
“BAE Systems Australia’s new subsidiary, ASC Shipbuilding, has been awarded a contract by the Australian government that provides the framework for the design and build of nine Hunter-class frigates for the Royal Australian Navy,” said BAE Systems. (Source: IHS Jane’s)
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Odyssey is an independent corporate finance firm which advises on acquisitions, business sales, management buy-outs and raising finance, typically in the £5m to £100m range. We have extensive experience in the niche manufacturing sector with our most recent completed deal being the sale of MacNeillie to Babcock Plc. Details can be seen at: http://www.odysseycf.com/case-study-macneillie/
As a result of this and related projects we have developed relationships with buyers and funders looking to acquire or invest in the sector. We would be happy to share further insights into the sector and to carry out reviews of businesses whose shareholders are considering an exit, acquisition or fundraise.
The review will include:
* Valuation
* Market review
* Comparative deals and structures
* Initial thoughts on buyers/ investors/ targets
* MBO viability
* Feasibility review and identification of any issues to be addressed pre-deal
There is no charge for this review.
If this is of interest we would be happy to meet at your convenience.
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