French aerostructures supplier Daher buys 70% stake in EADS Socata

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Daher has purchased a 70% stake in fellow French manufacturer EADS Socata in a deal which will create a leading aerostructure supplier generating nearly $600 million in revenues annually.

Daher has been in exclusive talks with EADS since July over purchasing a majority stake in Socata with the goal of completing a deal by year-end. Daher and EADS say in a statement that the sale of a 70% share in Socata to Daher has now been completed and Daher will take control of Socata in January, pending approval from French and German competition authorities.

Daher is a fast-growing aerostructure manufacturer with four aerospace factories in France as well as three other factories in Australia, Mexico and Morocco. The French company projects aerospace revenues of $390 million this year.

Daher's aerospace business has nearly tripled over the last five years, from a $140 million base in 2004, and now accounts for roughly half of its total revenue stream. Daher's slower growing non-aerospace business includes a wide mix of transport, logistics and assembly services.

EADS Socata recorded revenue of €280 million ($362 million) in its last fiscal year. Roughly half of company's revenues are generated by its aerostructures business. The other and better known half of its business involves manufacturing single-engine turboprop and piston aircraft for the general and business aviation markets, including the new TBM-850 high-speed turboprop.

Since unveiling plans to merge both Daher and Socata have touted their common goal to grow their aerostructures businesses and the synergies the deal would generate. Prior to even discussing a possible merger, the two companies won a joint bid to supply Airbus with landing gear doors for the new A350 and are now jointly seeking additional A350 work.

"With Socata we are aiming to strengthen our group's presence in the aerospace sector," Daher Group chief executive Patrick Daher says in a statement. "Socata's expertise in aircraft manufacture will give us a highly beneficial new perspective that will enable us to better meet the needs both of aircraft manufacturers and of the business jet customers we are trying to develop. This is a unique opportunity to become a major European player in the business jet and aerostructures market."

Adds EADS Socata chief executive Jean-Michel Leonard: "This Daher-Socata association will allow the creation of a leading European industrial player in the domain of aerostructures and open up new development prospects in general aviation ... We are delighted by this takeover by Daher which is an excellent partner for us. We have a common vision and shared values."

Leonard said last month that EADS Socata, independently of Daher, was already projecting rapid growth of its aerostructure business.

EADS Socata currently supplies components to Airbus, helicopter manufacturer Eurocopter and business jet manufacturer Dassault Falcon. It also is an indirect supplier for Embraer aircraft.

Leonard said last month the company is currently seeking more A350 work as well as pursuing new direct relationships with Bombardier, Embraer and "possibly Boeing". In particular he said EADS Socata is targeting new aircraft programmes including the Bombardier CSeries.

Daher already is a supplier to Bombardier but counts other French manufacturers, including Airbus, ATR, Eurocopter and Dassault as its main aerospace customers. Daher marketing manager Philippe Villard says the manufacturer is now trying to forge new relationships with US manufacturers, including Spirit AeroSystems and Vought Aircraft.

Leonard, in speaking to reporters last month, said if EADS Socata succeeded in merging with Daher the top priority for growth of the combined company would be aerostructures. But he also said Daher had already agreed to support and fund EADS Socata's new twin-engine business aircraft.

The so-called NTx is now being studied by a group of about a dozen EADS Socata engineers with the goal of launching the project by 2010. Entry into service is expected in about 2014.

Daher, in its statement announcing the completion of the purchase of a stake in Socata, says the acquisition "would enable the newly formed Daher-Socata alliance to launch a new business jet programme". EADS Socata, which has been looking at expanding into the twin-engine market for several years, has until now maintained the TB-X could be either a turboprop or jet.