Cobham Advanced Electronic Solutions' space unit attracts strategics as it calls for final bids, sources say

Breaking News 14 September

Cobham Advanced Electronic Solutions' space unit attracts strategics as it calls for final bids, sources say

Advent International is collecting final bids in the sale of Cobham Advanced Electronic Solutions' space business this week, said three sources familiar with the matter. 

The bidder pool is a mix of private equity firms and strategics, the three sources and three additional sources familiar with the matter said. Veritas Capital and AMETEK [NYSE:AME] are among the bidders circling the business, four of the sources said. Two of the sources said UK-based BAE Systems [LON:BA] is also showing interest via its US business. Three of the sources said Mercury Systems [NASDAQ:MRCY] looked at the asset earlier in the process, but it wasn't known if the aerospace and defense technology company is still around it.

This news service reported last month that bidding in the sale of Cobham Advanced Electronic Solutions' (CAES) space business had been extended to include a second round of non-binding offers. The second round of bids was due on 16 August, it was further reported.

The sale of CAES’ space unit is part of Advent International-backed owner Cobham Limited’s larger ambitions to sell the entire division, as reported last month. The remaining parts of CAES are expected to come to market in a separate auction when the space unit is sold, it was further reported.

EBITDA for the whole of CAES is around USD 225m to USD 235m, as reported. CAES’ space unit has an EBITDA of USD 130m, it was further reported. Its sale is being run by Goldman Sachs’ and Lazard’s US-based teams, this news service reported in June.

Two of the sources said larger defense contractors were interested in the CAES space asset earlier in the process, though it wasn't known if they are still around it.

Advent has made several moves over the years to restructure Cobham’s portfolio, most recently selling Cobham Microwave to Fonds de Consolidation et Developpement des Entreprises in March and launching a sale of Cobham Aviation Services in Australia in February, according to media reports, and selling Cobham Mission Systems to Eaton [NYSE:ETN] in 2021.

Advent acquired Cobham in 2020 in a USD 5bn deal. Under its ownership, Cobham has signed several high-profile contracts, including a USD 500m supplier deal between its CAES unit and Raytheon Technologies.  

Cobham won the UK government's approval for its GBP 2.57bn takeover of UK-based Ultra Electronics in July.

A BAE spokesperson said, "We regularly evaluate potential portfolio shaping opportunities to assess their fit toward advancing our strategic objectives, but we do not comment or speculate on potential mergers, acquisitions or divestitures.” 

Cobham, Advent, Veritas Capital and Goldman Sachs also declined to comment. AMETEK, Mercury Systems and Lazard did not return requests for comment.

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