Danish aircraft parts distributor Satair has agreed to be taken over by European planemaker Airbus in a deal valued at over US$500 million.
Shares in Satair leapt as much as 22.8 percent in heavy volume in Copenhagen and were up 22 percent at 573 crowns in by 0956 GMT.
The tie-up follows months of talks that have lifted the Danish company’s stock and echoes a similar link-up between Boeing and a leading parts distributor, as aircraft manufacturers spread further down the supply chain to improve returns, Reuters reports.
The two companies said Airbus would offer Satair shareholders 580 Danish crowns in cash and warrant holders 378.66 crowns in a tender to be backed by Satair’s board.
The deal will make Airbus a distributor of parts for its U.S. arch-rival Boeing, with which Satair struck a long-term supply-chain agreement back in 2006. But while Airbus sees some synergies, the firms said they would remain separate entities.
“Satair has been the preferred supplier to Airbus of components for many years and we do not expect any counter offers,” Nordea senior analyst Finn Bjarke Petersen said in a note to clients.
“The price is a significant premium to the peer group valuation and to the share price prior to announcement of buyer interest,” Petersen said.
In 2006, Boeing bought an aviation parts distributor called Aviall, which also provides parts for Airbus aircraft.
Satair said it would continue to distribute Boeing parts.
“Satair has been distributing as a normal distributor, will keep its autonomy, (and) it is obvious that as business-minded people we will keep the client base,” EADS’s head of mergers and acquisitions Boris Zaitra told a news conference in Copenhagen.
The deal is the latest effort by Airbus parent EADS to reduce heavy dependence on cyclical aircraft production revenues by expanding further into high-value services.
Shares in EADS were up 1 percent at 24.72 euros.
Airbus announced on Tuesday it had agreed to buy U.S.-based Metron Aviation, a provider of air traffic management products, for an undisclosed sum in a bid to boost industry calls for modernised air traffic systems to save emissions and costs.
Earlier this year, EADS bought Canadian overhaul and repair firm Vector Aerospace for around $640 million.
Analysts have criticised the company for having too much cash — equivalent to $17 billion at the end of the last quarter — on its balance sheet, providing meagre returns versus the higher costs of financing equity and debt.
The deal, worth 14 times Satair’s core earnings, underscores solid valuations as the aerospace industry recovers more quickly than expected from recession, due mainly to growth in Asia.
It offers Satair shareholders a 23 percent premium compared to the latest price or a 94 percent premium compared to the share price before Satair disclosed takeover talks in March.
“The price is a significant premium to the peer group valuation and to the share price prior to announcement of buyer interest,” Nordea’s Petersen said.
Danish pension fund manager ATP, which controls 8.4 percent of Satair, told Reuters it would accept the Airbus bid.
EADS, which announces second-quarter earnings on Friday, said Satair would boost its earnings per share.
Zaitra said the EPS boost would come “relatively quickly, but there are seasonal changes that also move the EPS of Airbus.”