Airbus, Safran in approach for Eramet's Aubert & Duval

PARIS (Reuters) - Airbus, Safran and aerospace-focused fund Ace Aero Partenaires have submitted a non-binding offer for Aubert & Duval (A&D), the superalloys supplier owned by mining group Eramet, two people familiar with the matter said.

FILE PHOTO: The logo of Airbus is pictured at the entrance of the Airbus facility in Bouguenais, near Nantes, France, July 2, 2020. REUTERS/Stephane Mahe

Eramet said in June it had launched a strategic review of its specialist A&D subsidiary, after a third of its activity was cancelled by the coronavirus crisis, and would consider all options for the 113-year-old business.

The non-binding offer marks an initial statement of interest and allows access to detailed company data, the people said.

Eramet reiterated it was considering all options for A&D including a sale, but declined to elaborate.

Airbus, Safran and Ace Aero Partenaires declined to comment.

A&D recorded negative free cash flow of 156 million euros ($189 million) in the first half and Eramet expects its 2020 sales to be down around 15% from 2019 and 34% from 2018.

Its problems are emblematic of the turbulence hitting suppliers in the Occitanie region in southwest France, where a total of 40,000 aerospace jobs are seen at risk.

Its advanced superalloys are used in engines for the French Rafale fighter and the LEAP commercial engine, co-produced for Boeing and Airbus by Safran and General Electric.

Airbus is also A&D’s biggest direct customer.

The unusual decision by Airbus to embark on purchasing one supplier in co-operation with another comes amid concerns over the impact of the pandemic on suppliers and follows Safran’s expansion to become the world’s third-largest aero contractor.

Planemakers have considerable influence over consolidation in the supply chain because of their position at the top of the industry tree and the small number of customers for plane parts.

Although Safran was seen as interested in buying Aubert & Duvall alone, consolidation among big suppliers has rung alarm bells at Airbus and Boeing and Airbus is seen as reluctant to leave full control of A&D to Safran, one of the people said.

French newspaper La Tribune, which first reported the non-binding offer, said each member of the consortium would finance a third of the purchase.

Industry sources have previously said that Airbus and Safran are the most likely contenders to take over A&D with the backing of the French government.

The government holds stakes in Eramet, Safran and Airbus, though its role in the latter is restricted to overseeing defence interests.

Union officials said A&D confirmed the business was for sale in meetings last week as management unveiled a cost-saving plan.

The proposals will be discussed in coming weeks and include cutting 380 out of some 4,000 jobs through voluntary redundancies.

($1 = 0.8249 euros)

Reporting by Gus Trompiz and Tim Hepher; Writing by Benoit Van Overstraeten; Editing by Jane Merriman, Kirsten Donovan