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Aviation History
1997
1997 - 0126.PDF
BUSINESS Czechs approve Vodochody sale THE CZECH Government has approved the sale of a stake of around 34% of financially troubled jet-trainer manufacturer Aero Vodochody to a strategic partner. The successful bidder is due to be announced by 2 April. A sale to a foreign investor is not ruled out, although some within the Government have hinted at a preference for a domestic buyer. Czech chemical and arms con glomerate the Chemapol group has expressed an interest, while also in the running are: the Cimex trad ing company ; CSA Czech Airlines in alliance with Boeing; Dassault; Lockheed Martin; and Saab. Aero Vodochody is pinning its hopes for a recovery on its flagship L-l 59 light jet trainer, now in the final stages of development. It already has an order for 72 aircraft from the Czech air force. The Government has approved a CKr3.3 billion ($123 million) package to help clear the compa ny's debt and state shareholders have agreed to underwrite a CKr2.5 billion share issue as part of the sell-off. The company is presently 44% owned by die state Aero Holding group, with another 32% in the hands of state-owned Kon- solidacni bank. • Raytheon's Tl purchase leaves options open for Hughes bid GRAHAM WARWICK/ATLANTA RAYTHEON IS TO purchase the Texas Instruments (TI) defence electronics business for $2.95 billion, in a cash deal which is seen as leaving die group's options open for a possible take-over of Hughes Electronics. Northrop Grumman, which itself bid unsuc cessfully for TI, is also understood to be sharpening up for a bid battle over Hughes. The TI purchase, which is expected to be completed in the second quarter, will boost Ray theon's annual defence-electronics revenues to around $8 billion, plac ing the company second in that market behind Lockheed Martin. A successful bid for Hughes, valued at $9 billion, would vault Raytheon into first place. TI Defense Systems & Elec tronics Group, which will become Raytheon TI, has annual sales of $1.8 billion and employs 12,000 people, based largely in Texas, pro ducing air-to-surface weapons, air borne radars and forward-looking infra-red systems. Raytheon Elec tronic Systems is involved in air-to- air and surface-to-air missiles and ground radars, while its E-Systems division, acquired in 1995, spe cialises in reconnaissance and sur veillance systems. Raytheon defends the high price paid for TI by arguing that its operations are "highly comple mentary", and offer high operating profit margins. The group says tliat these benefits help to justify what appears to be a high acquisition price. Recent US defence deals have tended to be priced at only a little above $1 for each $1 of sales. Raytheon adds diat the tax benefits to a cash deal will reduce die final cost to $2.4 billion. By making a cash deal for TI, Raytheon has left its options open to make a stock offer for a possible Hughes acquisition. Although the TI deal will add $6.6 billion to die group's debt, this is expected to be paid down over five years from combined strong cashflow. TI's decision to sell its defence business and Raytheon's offer to buy were prompted by Lockheed Martin's acquisition of defence- electronics specialist Loral. TI says that the resulting vertical integra tion "compromised"its ability to do business with the new group. "We were concerned about our ability to compete and win, operat ing alone. We needed to be part of a company with a larger defence business," says TI. Raytheon also concedes that "...recent events have redefined what it means to be a leader" in the defence-electronics business, which it adds is the "the most attractive growth area in defence". Bids for Hughes were due to be submitted to owner General Mot ors on 6 January. Northrop Grumman, with revenues of more than S5 billion from missiles and defence electronics following its Westinghouse acquisition, was expected to be a key bidder in an attempt to remain close to the emerging US military giants. Raytheon declines to comment on whether it has submitted a bid for Hughes, but says that the TI cash deal leaves "...all opportuni ties available to us to enter into other transactions". • France nears final Aerospatiale/Dassault decision JULIAN MOXON/PARIS THE FRENCH Government, anxious to kick-start the restructuring of its aerospace industry, is on die verge of finalis ing the details of the merger between Aerospatiale and Dassault Aviation. It also plans to move quickly towards privatisation of die resulting group. Approval for the merger, by a newly created state privatisation committee is expected in a "few weeks", leading to final approval of the Government's plan for merg ing the two companies by June, say senior sources. According to a common state ment issued by the ministries of defence and economics, the merg er would see the companies link resources in areas such as research, administration and purchasing, while new divisions will be created for fighter and business aircraft, transport aircraft (which may be drawn into the newly formed Airbus company) , space and defence, helicopters and mainte nance will be set up (Flight International, 1-7 January, PI5). Major questions remain to be resolved, however, including seri ous differences over die valuations of the two companies. Aero spatiale's bank, Lazard Freres, val ues the state-owned company at around Fr2 5 billion ($5 billion) and Dassault Aviation at a little over FrlO billion, but Dassault's bank, Paribas,putsavalueofFrl2 billion on bodi. The Government's bank, Societe Generale, is said to favour die Lazard evaluation. Such issues will also affect how much of the combined grouping remains in the hands of the Dassault family, including company boss Serge Dassault,and how much will be held by the state. Once the merger is achieved, it is likely that the group will go on to be privatised by die end of die year. Speculation has also surrounded a possible further merger with Thomson-CSF, depending on its own privatisation. The Govern ment had backed a sale to Lagar- dere before being over- ruled by the privatisation committee. Another option is for the Government to seek a flotation for its 58% stake in die defence-elec tronics giant. A decision is believed to be imminent. • The size of Serge Dassault's holding has still to he resolved 20 FLIGHT INTERNATIONAL 15 - 21 January 1997
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