Thales entered into exclusive negotiation to acquire, for US$1.1 billion, Cobham Aerospace Communications (AeroComms), a supplier of advanced, ultra-reliable innovative safety cockpit communication systems.

With ~690 employees, of which ~190 are engineers, the company operates across a well-invested footprint in France, South Africa, U.S./Canada and Denmark. It is expected to generate ~US$200 million revenues in 2023.

With this acquisition, Thales aims to pursue its strategy to strengthen its avionics portfolio:

• Adding global leading position in safety cockpit communications, complementing Thales Avionics strong offering
• Incorporating recently developed cutting-edge products benefiting from solid positions with major OEMs and strong aftermarket/retrofit opportunities.

Value accretive transaction for the group:

• Expected medium-term double-digit growth per annum and accretive impact on margins
• 17x FY23E EBIT pre-synergies/15x FY23E EBIT post-run rate cost synergies
• EPS accretive from year 1.

Yannick Assouad, Thales executive vice-president of avionics, said, “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. By guaranteeing a cyber-secured, live connection between the cockpit and air traffic control, aircraft will be able to fly optimized trajectories in real time, significantly reducing fuel consumption and, consequently, CO₂ emissions in the next two to three years.”

Nicolas Bonleux, Cobham Aerospace Communications CEO said, “This acquisition reflects the successful transformation of Cobham Aerospace Communications in recent years under Advent’s ownership. Our sizable investment in R&D over the last years has further consolidated our position as a leading player in our markets, with a series of new contracts won already this year.

We are proud to join Thales, which will provide Cobham Aerospace Communications with a platform to build on recent success, continue the development of several cutting-edge avionics products, and ensure the business’ future growth. The aircraft connectivity and communication markets will undergo a true revolution in the coming years, which will unlock potential for unique avionics products like ours. Our combined offering with Thales Avionics will enable us to further accelerate our contribution to safer, greener, more comfortable and more efficient air travel.”

By integrating AeroComms’ cockpit communication systems portfolio, Thales will be positioned to seize the opportunity of the shift towards connected cockpits. By the end of the decade, Thales will be able to fully address the permanent and secured connectivity needs of the aeronautical market.

This offering will put Thales in a highly differentiated position to provide its customers with safer, affordable and sustainable solutions through:

• Real-time and cyber-secured air-to-ground services
• Increased operations’ efficiency (enabling eco-friendly/green flight, full spectrum cockpit connectivity, etc.)
• Better pilot assistance, paving the way to future autonomy solutions
• Reduced OEMs installation burden with integrated offers and reduced aircraft weight and drag (smart antenna).

The transaction will be EPS accretive, pre-synergies, as of the first year post closing. Thales will finance this acquisition through its available cash resources.

Employee representative bodies of both Thales and Cobham Aerospace Communications will be consulted as part of the project. The closing of the transaction is expected during the first half of 2024 upon customary merger control and regulatory approvals completions.