French aero engine maker Safran has launched a $9 billion agreed bid for seats manufacturer Zodiac Aerospace to create the world's third-largest aerospace supplier as the industry bulks up to tackle record high output plans. Sonia Legg reports.
An engagement party six years after the first proposal. Zodiac Aerospace wasn't keen on marriage to Safran then. But three years of ill health and several profit warnings has made the prospect of a supporting partner far more attractive. The French aircraft seat manufacturer also acknowledges the industry has changed. (SOUNDBITE) (French) ZODIAC CEO, OLIVIER ZARROUATI, SAYING: "What airlines are fighting for today in a competitive market is not about what kind of plane it flies. It's what the cabin has to offer, in the services it provides for its clients." The French aero engine maker had never given up hope - the agreed dowry, $9 billion - almost 30 euros a share. Safran is confident it can nurse Zodiac back to full health without its new "LEAP" engines for Airbus and Boeing suffering any ill effects. (SOUNDBITE) (French) SAFRAN CEO, PHILIPPE PETITCOLIN, SAYING: "There is enough talent on our side to be able to answer the needs of our own programmes like Leap and, if needs be, help the former Zodiac activities." Zodiac shares jumped 23 percent when Paris markets opened - heading for their best performance in 30 years. Safran's rose 1 percent. (SOUNDBITE) (English) MICHAEL HEWSON, MARKET ANALYST, CMC MARKETS, SAYING: "Zodiac has pretty much given in to the inevitable. They have been struggling with production problems with respect to airline seat orders for the new A350. There is an awful lot of pressure among aircraft makers and obviously the component makers to streamline the costs and boost production and Zodiac has been struggling with that." The new company will be the world's third largest aerospace supplier in an industry dealing with a boom in jet orders. It isn't the only big merger either. Rockwell is expected to complete its acquisition of Zodiac's main rival B/E Aerospace in the spring.