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EADS expands in Canada, eyes U.S. market

disclaimer: image is for illustration purposes only
by Staff Writers
Paris (UPI) Mar 31, 2011
EADS' acquisition of a Canadian helicopter servicing company is part of a wider strategy to gain a stronger foothold in the North American defense market.

European defense giant European Aeronautic Defense and Space Co. this week said it would buy Vector Aerospace from Canada for nearly $640 million. The offer represents an 80 percent premium over Vector's Dec. 2 shares closing price, EADS said.

Analysts say the deal is aimed at increasing EADS' presence in North America to offset currency fluctuations and addresses its aim for more deals in the world's largest defense market. The company has a few services contracts with U.S. armed forces but isn't as successful in the equipment sector. EADS daughter Airbus still generates the bulk of the group's sales.

EADS looks to change that. The so-called Vision 2020 Strategy foresees the Europeans increasing their presence in the U.S. defense equipment and related services market with a target of $10 billion in sales (excluding from Airbus) in the United States by 2020.

"This acquisition perfectly fits EADS' Vision 2020 strategy, increasing services, strengthening the helicopter business, international and more specifically North American exposure while keeping a good balance between military and civil activities," EADS Chief Executive Officer Louis Gallois said in a statement.

The deal comes just a few weeks after the Pentagon, in a major blow to EADS, awarded a $30 billion contract to supply the U.S. Air Force with an in-flight refueling tanker to rival Boeing. The companies had competed for the deal for nearly a decade.

Vector Aerospace has roughly 2,500 employees and facilities in Britain, Canada and the United States, where it services helicopters and aircraft engines.

The company in 2010 generated sales of $565 million, nearly a quarter of the turnover posted by the support and services unit of EADS daughter Eurocopter.

EADS said it expects the purchase would create valuable synergies.

"Completion of the transaction will enable Eurocopter to capitalize on its own commercial network together with Vector Aerospace's offering in order to position itself as a leading global multi-platform service provider with an extended presence in North America and the U.K.," the company said in a statement. "Vector Aerospace will benefit from Eurocopter's global footprint and presence in 25 countries to develop in fast growing markets such as Asia and Latin America."

EADS is Europe's largest aerospace and defense company. In 2010, it generated revenues of nearly $65 billion and employed more than 121,000 people.

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