WASHINGTON Defense electronics group Thales SA (TCFP.PA) is continuously looking for acquisitions in the United States and Britain, a senior executive said on Tuesday.
"We are always looking for potential acquisitions in areas that really benefit the business globally," Alex Dorrian, chief executive of Thales UK and executive vice president for international operations, said at the Reuters Aerospace and Defense Summit in Washington.
"Clearly the U.S. and the UK are out there as areas where we would continuously be looking to do something," Dorrian said. "There is no particular program of acquisition currently under way but if the right company came that fit ... obviously we can do that."
Dorrian also said that while smaller acquisitions are easier than larger ones, the company is open to doing larger deals.
"A big acquisition depends on the fundamentals of the acquisition. Is it earnings-enhancing, does it fit with the strategy, is it a good deal? If there was a fantastic deal out there that was a big number, that may be possible," he said.
Thales was interested in buying U.S. military engineering and electronics products manufacturer DRS Technologies earlier this year but lost out to Italian defense company Finmeccanica SpA SIFI.MI, which bought DRS for $4 billion.
The deal represented a premium of 27 percent to DRS' closing share price the day before the offer.
Dorrian declined to comment on that deal but did say that valuations, especially for small companies that make niche technologies, are "certainly high" and added that he does not expect them to fall in 2009. Valuations fell slightly this year as the credit crisis and the weak economy hammered stocks across every sector.
Analysts expect more European defense manufacturers looking to gain a presence in the U.S. defense market -- the world's largest -- to target U.S. defense suppliers.
U.S. defense spending -- approved at more than $540 billion for 2009 excluding the cost of war -- is not expected to decrease in the next few years, even though the rate of growth is expected to slow.
Allan Cameron, chairman and chief executive of Thales North America, said there are many defense companies up for sale in the U.S. market.
"There are a number of ways we go to market here in the U.S.," Cameron said. "We could get a license to the technology, find a U.S. partner to bring in our technology and, if it makes sense, we look at a company to buy."
Thales, which was privatized 10 years ago, is in the midst of shareholder changes, as French planemaker Dassault Aviation (AVMD.PA) prepares to replace U.S.-French telecoms equipment group Alcatel Lucent ALUA.PA as its largest private shareholder.
Dassault had previously held a small Thales stake through the family firm that owns the business jet and warplane maker.
Dorrian and Cameron dismissed concerns that the shareholder changes would make it harder for the French company to win acceptance or carry out acquisitions internationally.
"Thales is very international and is respected as a key player. Dassault as a potential shareholder has no conflicts with our business," Dorrian said.
(Additional reporting by Tim Hepher, editing by Gerald E. McCormick and Tim Dobbyn)
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