A merger written in the stars

Safran has finally announced its intention to merge with Zodiac Aerospace. A cash tender offer at €29.47 per Zodiac share represents a premium of 24.5% to Wednesday’s closing price. This is a deal that has been on the cards for most of this decade and will create the world’s third-largest aerospace supplier after UTC and GE. Safran announced last year that it wanted to focus on its core business of civil aerospace, and merging with Zodiac is consistent with that. However, there is a risk that integrating such a large acquisition will be a distraction for management from its focus on ramping up output of its existing business.