Each week, Army Technology, Naval Technology, and Airforce Technology editors select a deal that illustrates the themes driving change in our sector. The deal may not always be the largest in value, or the highest profile. But we select it because of what it tells us about where the leading companies are focusing their efforts, and why. We pick apart the deal itself, and the industry theme behind it. This new, thematic deal coverage is driven by our underlying Disruptor data which tracks all major deals, patents, company filings, hiring patterns and social media buzz across our sectors.
Thales has entered into exclusive negotiations to acquire Cobham Aerospace Communications, a supplier of communication systems.
This strategic move, valued at $1.1bn, will bolster Thales‘ portfolio and position the company positively in the growing communications and connectivity market.
Cobham Aerospace Communications, known as AeroComms, operates across multiple countries, including France, South Africa, the USA/Canada, and Denmark. With approximately 690 employees, including 190 engineers, AeroComms generated an estimated revenue of around $200m in 2023.
A key player in communication systems
Thales recognises the potential of AeroComms’ product range, which has secured positions with major OEMs (Original Equipment Manufacturers) and aftermarket opportunities.
The acquisition aligns with Thales’ long-term strategy of fortifying its Avionics division. By adding AeroComms’ communications capabilities, Thales will enhance its existing offerings and unlock new avenues for growth.
This partnership will enable Thales to provide cyber-secured, real-time connectivity between aircraft cockpits and air traffic control, resulting in optimized flight trajectories, reduced fuel consumption, and lower CO2 emissions within the next few years.
Yannick Assouad, Thales Executive Vice-President Avionics, expressed enthusiasm about the acquisition, stating, “With the acquisition of Cobham Aerospace Communications and its highly skilled team of aerospace communications experts, and combined with our own critical avionics experts, Thales will establish a game changer in the very attractive and fast-growing communications and connectivity market to the benefit of a more sustainable aerospace future.”
Nicolas Bonleux, CEO of Cobham Aerospace Communications, echoed the sentiment, “Our combined offering with Thales Avionics will enable us to further accelerate our contribution to safer, greener, more comfortable, and more efficient air travel.”
Enhancing Thales’s role in the communications and connectivity market
Airbus have Cobham Aerospace Communications’ Radio Management System as a standard fit on their H145M multi-role rotary aircraft, and Cobham also supports the UK Military Beechcraft T-6 Aircraft as some examples of aircraft that Cobham Aerospace Communications has supported.
AeroComms specializes in designing, producing, and supporting solutions. Their portfolio includes advanced L-Band Satcom systems, digital audio and radio management solutions, and passive antenna systems that facilitate connectivity, communications, and navigation.
AeroComms’ recent innovations, such as Aviator-S in Satcom and DRAIMS in digital Audio/Radio, position the company for future revenue growth.
Integrating AeroComms’ communication systems will push Thales towards addressing the industry’s trend of connected cockpits. By the end of the decade, Thales will be equipped to provide permanent connectivity solutions tailored to the aeronautical market’s evolving needs.
Daniel Jones, Head of R&A for the aerospace, defence, & security team at GlobalData, claimed: “Demand for connectivity is expected to rise substantially with the next-gen of single-aisle planes ramping up production, combined with a good sale price.”
Last month, Thales led the European EPIIC Research Project to design technologies for future military cockpits to rethink human-machine interaction by using technologies to create an immersive environment where the machine supports the pilot. The fighter pilot will be able to supervise and operate a set of platforms, with or without crew, in a highly complex and evolving environment.
Augmenting Thales’s growth and profitability
This offering will contribute to safer flights, increased operational efficiency, improved assistance, and reduced installation burdens for OEMs.
Adding AeroComms will augment Thales Avionics’ sales growth and EBIT (Earnings Before Interest and Taxes) margin profile. The transaction will generate significant synergies, including pre-tax net cost synergies of approximately $10m per annum and revenue synergies of roughly $40m per annum.
These synergies will result from consolidation efforts, R&D alignment, purchasing optimization, expanded go-to-market strategies, and increased aftermarket upselling opportunities.
Thales plans to finance this acquisition using its available cash resources. The transaction is subject to customary merger control and regulatory approvals, with the closing expected to occur during the first half of 2024. Thales and Cobham Aerospace Communications will engage with their respective employee representative bodies to ensure a smooth transition and integration process.
As Thales expands its portfolio and improves its position in the communications and connectivity market, Thales sets the stage for a more sustainable and efficient future.
