Airbus to keep border security unit in defense electronics sale

[February 17, 2016]  By Jens Hack and Tim Hepher

FRANKFURT/SINGAPORE (Reuters) - Airbus Group <AIR.PA> has excluded its border security business from the planned sale of its defense electronics unit, whose sale may now go ahead within weeks, defense and space workers at the European company were told on Wednesday.

The company had planned to sell defense electronics and border security activities in one package, but missed its goal of reaching a deal by early 2016 because of delays with a border project in Saudi Arabia, according to a letter to staff.

"For this reason, Airbus Defence and Space has decided to remove the Border Security business from the joint package and to retain it within Airbus Defence and Space," Bernhard Gerwert, the unit's chief executive, said in the letter, seen by Reuters.

"This means that the sales process for Defence Electronics shall continue as planned and can be finalised shortly," he said.

The defense electronics arm has been valued at up to 1.3 billion euros ($1.5 billion) and taking out border security will not lead to a lower price, a person familiar with the matter said.

"The border security ops are losing a high double-digit million euro amount each year and their enterprise value is zero at best," the person said.

The Frankfurter Allgemeine Zeitung newspaper, which first reported the letter's contents, said Airbus Group hoped to be able to take advantage of new opportunities for border security presented by Europe's refugee crisis, citing an unnamed manager.

"The move is not linked to a new boom in border security but has only been done to facilitate the sales process", an Airbus Group spokesman said.

"The clear focus of the border security entity staying within Airbus is on executing existing projects not on exploring new opportunities."

Europe's largest aerospace group is currently selling several businesses to focus its defense division on warplanes, missiles, launchers and satellites.

The group had originally planned to pick a buyer for the defense electronics unit by the end of last year as part of its plan to dispose of assets with combined annual revenues of around 2 billion euros ($2.2 billion).

Airbus Group short-listed Carlyle <CG.O> and KKR <KKR.N> for the defense electronics unit, after they put up significantly higher offers than rivals, three people familiar with the matter told Reuters in December.

($1 = 0.8957 euros)

(Writing by Caroline Copley; Additional reporting by Jens Hack in Frankfurt and Alister Doyle in Paris; Editing by Georgina Prodhan and Mark Potter)

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