2023-07-24 04:00:00
Since his arrival at the head of Safran in January 2021, Olivier Andriès, like a general on the campaign trail, has been firing on all cylinders to remodel and strengthen the aeronautical and defense equipment manufacturer to enable it to face the challenges of a new world still in its infancy. That of post-Covid, of the war in Ukraine but also of future international crises, and, finally, of the forced decarbonization of aviation. A world where resilience is a key issue for Olivier Andriès, who intends, through numerous external growth operations, to reduce dependencies and in fine strengthen Safran’s strategic autonomy. This will enable it to better face all future crises. This brutal awareness was caused by the war in Ukraine, which really changed the software of States and industrialists in general and of Safran in particular.
“We have developed a resilience strategy for our supply chain, taking into account the rise in geopolitical tensions around the world. We don’t want to find ourselves in a difficult situation because, all of a sudden, there is a crisis opening up like the one that may have happened on February 24, 2022. We have decided to set up a resilience program for our supply chain, in particular to limit our dependence on certain countries so as to be resilient and resistant to these crises, “explained Safran’s CEO in June at the Paris Air Forum organized by La Tribune.
If Safran had already begun its transformation before Russia’s invasion of Ukraine by managing its business portfolio « active » As Olivier Andriès pointed out on Friday during the official announcement of the project to acquire the actuation and flight controls business of Collins Aerospace, this conflict in Europe has reinforced his choice to reduce dependence on Safran. And besides, he decided since the war in Ukraine to accelerate the transformation of his group. Clearly, Safran has transformed itself over the past two years into a “serial buyer” by seizing much more of the acquisition opportunities that were offered to it. In addition, the reinternalisation of certain activities, better guaranteed access to raw materials and the robustness of its supply chain are also key levers for Safran to achieve a certain level of strategic autonomy.
Safran, this new “serial buyer”
Safran, which is already a major contributor to French sovereignty (deterrence, in particular via inertial navigation, the engine of the Rafale and propulsion of the M51, civilian launchers, etc.), has therefore multiplied its acquisitions over the past two years for a total of approximately 2.5 billion euros (compared to 400 million disposals) in order to strengthen its autonomy, such as Orolia (approximately 100 million euros in turnover), Syrlinks (24 million euros) and Aubert & Duval (regarding 550 million euros) in particular. He offered himself the very beautiful and very discreet tricolor ETI Orolia, which is one of the world suppliers of positioning, navigation and time (PNT) solutions, and which manufactures the atomic clocks of the Galileo constellation.
This purchase is “a very good operation in the field of defenserecalled Olivier Andriès on Friday. This company is a very good complement to our inertial navigation activities. This positions us as one of the major global players in resilient PNT on all things positioning and navigation, which allows critical systems, especially military ones, to continue to operate in GPS environments that are jammed or deceived.”.
The recent takeover in partnership with Airbus and Tikehau Capital of Aubert & Duval, which was going through a serious economic crisis, is also an example of Safran’s new strategy led by Olivier Andriès. For the aeronautical and defense equipment manufacturer, it was vital to build alternatives to the supply of titanium from Russia, which supplied European aeronautics with around 50% of its needs at the beginning of 2022. In addition, Aubert & Duval being the only material developer outside the United States, this purchase allows Airbus and Safran to secure their strategic supply and the development of new materials intended for current and future civil and military aircraft and engine programs. On the other hand, the purchase of the SME CILAS, also in great financial difficulty, raises questions, including now internally.
In addition to its strategic purchases, Safran wished to supplement some of its assets. This is the case with the acquisition of the aeronautical electrical systems activity of Thales (124 million euros in turnover), the closing of which is expected in the second half of this year. With this planned acquisition, Safran Electrical & Power aims to pursue its strategy as an equipment supplier positioned across the entire electrical chain. The electrical conversion activities will be a significant contribution to Safran’s portfolio of activities, which will thus be able to continue to develop in terms of electrical generation, particularly in the field of defense and helicopters.
Finally, Safran announced that it has entered into exclusive negotiations with Air Liquide with a view to acquiring the aeronautical oxygen and nitrogen technological activities of Air Liquide advanced Technologies, excluding cryogenic activities related to the navy (over 40 million euros in sales). This operation represents “a very nice complement to our oxygen activities, underlined Olivier Andriès. It allows us to strengthen our position as the world’s leading supplier of complete oxygen systems, both for the military and for civilians.”. In addition, it allows Safran to position itself as a systems supplier.
Why the operation with Collins
The proposed acquisition by Safran of the activities of Collins Aerospace (regarding 1.5 billion dollars in turnover) ticks some of these boxes, in particular that of decarbonization, a strategic axis of the aeronautical equipment manufacturer along with that of sovereignty. It also allows the group to complete its activities in a key sector of today’s aeronautics and especially that of tomorrow. Because the new generations of planes that will arrive in the middle of the next decade, will evolve more and more towards what is called electric actuation. “The electrification of the aircraft will be a key element of decarbonization and the optimization of carbon dioxide emissions by next-generation aircraft”recalls Olivier Andriès.
So the flight controls are until the conclusion of this project “an area in which we were only marginally present. It is an area of critical aeronautical equipment”, notes Olivier Andriès, thus justifying this most important ambitious project since Zodiac. Safran will put on the table 1.8 billion dollars in available cash. In addition, the activities in the process of being sold by Collins Aerospace tick all the boxes of Safran’s DNA: “these are activities for which technological barriers are significant and activities that also ensure a good following-sales flow”decrypts Olivier Andriès.
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