French Aerospace Supplier Safran's Profit Lifted by Demand

By Robert Wall

LONDON -- French aerospace supplier Safran SA on Friday said full-year profit rose 21.7%, propelled by strong demand for the commercial airliners it equips amid a row over its proposed EUR8.5 billion ($9 billion) acquisition of plane cabin interior specialist Zodiac Aerospace SA.

Safran said adjusted net profit for 2016 was EUR1.8 billion, compared with EUR1.5 billion the prior year.

Sales rose 1.6% to EUR15.8 billion from EUR15.5 billion, largely driven by demand for its commercial aircraft engines and plane equipment.

Safran in January announced a plan to buy troubled Zodiac Aerospace to become the world's No. 3 aerospace supplier to plane makers Boeing Co. and Airbus SE behind United Technologies Corp. and General Electric Co.

Safran said it would pay EUR29.47 a share for Zodiac in a tender offer. If 50% of shares are tendered, the companies will merge based on an exchange ratio of 0.485 a Safran share for each Zodiac share. The structure will allow Zodiac's family shareholders and two institutions to remain investors in the combined company.

But the transaction, valued at EUR9.7 billion including debt, has drawn fire from activist hedge fund TCI Fund Management. TCI Chief Executive Christopher Hohn said in a letter to Safran the company was overpaying for Zodiac. It said it planned to oppose the deal and urged Safran to instead embark on a EUR3 billion share repurchase.

The company on Thursday defended the deal. Safran Chairman Ross McInnes said the deal had strategic rationale and pricing was in line with comparable transactions.

Safran on Friday said sales this year should advance in the low-to-mid single digits when stripping out the effects of a move this year to fold its rocket launcher activities into a joint venture with Airbus. Operating income should be close to this year's level of EUR2.4 billion.

Safran proposed a 10.1% boost in its dividend for 2016 of EUR1.52 per-share dividend.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

February 24, 2017 01:14 ET (06:14 GMT)

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