Investing.com -- Airbus Group (PA:AIR) announced on Friday that it reached a deal to sell its defense electronics business to private equity firm Kohlberg Kravis Roberts & Company for $1.2 billion.
The transaction marks the end of a two-year strategic initiative, in which the aircraft manufacturer sought to unload the segment to focus more intently on its civil and space assets, amid significant declines in defense spending in Europe. In August, KKR & Company emerged as a favorite in the first stage of auction bidding, along with Blackstone (NYSE:BX) Group LP and Carlyle Group (NASDAQ:CG) LP. The negotiations accelerated in late-January when German newspaper Handelsblatt reported that the two sides were close to reaching a deal.
Last June, Airbus outlined the package in a disposal plan dubbed "Project Orlando," which generated EBITDA of approximately €90-100 million in 2015, according to Bloomberg. With the sale of its defense sensor and border security assets, Airbus believes it will be able to place a greater focus on its military, aircraft, space launcher and satellite businesses.
"This is an excellent outcome for our Orlando process which aimed at repositioning Defence Electronics for the future with an excellent outcome for all stakeholders," Airbus CEO Bernhard Gerwert said in a statement. "Defence Electronics is a strong, profitable business with significant growth potential and we are convinced that KKR and the Defence Electronics management team and employees will continue to strongly develop the business going forward."
The transaction is expected to close in the first quarter of next year and is subject to customary closing conditions, including regulatory approvals and employee consultation, Airbus said in a statement.
Shares in Airbus gained 1.07 or 1.80% to 60.60 in after-hours trading.