Private equity firm KKR & Co. agreed to buy Airbus Group SE’s defense electronics business for $1.2 billion Friday as the European plane maker looks to scale back on its defense and space units as part of an overhaul announced in September last year.
Airbus may decide to retain a minority stake in the unit, which makes military sensors, electronic warfare and avionics equipment to ensure a seamless transition, the plane maker said in a statement. Bernhard Gerwert, CEO of Airbus’s defense and space division, termed the KKR pact as an “excellent outcome,” adding that the deal was expected to close in the first quarter of next year.
The defense electronics unit, part of the group's Airbus Defense and Space arm, has a global staff of 4,000 and annual revenues of roughly 1 billion euro ($1.2 billion).
"Defense Electronics is a strong, profitable business with significant growth potential, and we are convinced that KKR and the Defense Electronics management team and employees will continue to strongly develop the business," Gerwert, said.
In September last year, Airbus had announced plans to dispose of assets with combined annual revenue of about 2 billion euros ($2.25 billion) due to lower defense spending in Europe. As part of the restructuring, the company said it would sell half a dozen businesses and slash thousands of jobs.
Europe's largest aerospace group had said that going forward, it would focus its defense division on warplanes, missiles, launchers and satellites.
KKR’s stock fell 1.73 percent in New York on Friday while Airbus’ stock rose 1.8 percent in Paris.