PARIS, Feb 23 (Reuters) - France’s Safran rejected criticism by a UK hedge fund concerning the strategy, structure and financial terms of a proposed $9 billion friendly bid for Zodiac Aerospace and said it stood by its plans to acquire the seats manufacturer.
Stepping up a war of words over its agreed offer to create the world’s third largest aerospace supplier, the French aero engine maker sent a six-page rebuttal to TCI Fund Management and accused it of waging a public campaign to undermine its project.
TCI has questioned the strategic benefits of the deal and accused Safran of paying a “hugely inflated price” for Zodiac, which has issued around eight profit warnings in the past two years due to a production crisis in its interiors business.
It also objects to aspects of the deal’s complex structure, which calls for a cash offer followed by a merger to bring on board the company’s core group of family shareholders. TCI believes shareholders should be able to vote on the merger plan before the cash bid for at least 50 percent of Zodiac goes ahead.
In an open letter to TCI, Safran defended its strategy of diversifying from its core aero engines business as it gains access to Zodiac’s profitable aircraft equipment activities and expressed confidence in its financial goals.
“The board is not for turning,” Safran Chairman Ross McInnes told Reuters when asked whether the company would modify the terms or structure of its proposal to acquire Zodiac.
Reporting by Tim Hepher; Editing by Anderw Callus