May 25, 2018 / 12:37 PM / 2 years ago

Thales eyes bolt-on M&A but not chasing scale of U.S. rivals

PARIS, May 25 (Reuters) - France’s Thales has its eye on bolt-on acquisitions after securing chipmaker Gemalto but feels no immediate pressure to match the scale of ‘nose-to-tail’ aircraft parts suppliers like United Technologies, its chief executive said.

“Thales continues to examine opportunities for small and medium acquisitions. There are no other (acquisitions on the scale of) Gemalto in the pipeline,” Patrice Caine told a meeting of aerospace journalists on Friday.

In December, Gemalto accepted a 4.8-billion-euro ($5.60 billion) takeover bid from Thales to create a leader in digital security.

Asked if Thales is big enough to confront rivals like United Technologies after its planned purchase of Rockwell Collins, or Honeywell - both worth around four times Thales’s $27-billion market value - Caine said “time will tell”.

“On all of our markets...what counts is to be more innovative and competitive and that is not directly related to size,” he added.

He dampened suggestions that these U.S. conglomerates would reap an advantage by bundling sales of equipment or services from the nose to tail of aircraft, to edge out smaller rivals like Thales whose aerospace unit makes up 38 percent of sales.

“I haven’t really seen the notion of commercial bundling materialise. It’s not in the interest of planemakers who ... want to keep control of the overall architecture of their aircraft,” Caine said.

“If one day it took off, then that would call into question our model and size, but today it’s not happening in practice.” ($1 = 0.8570 euros) (Reporting by Tim Hepher, Cyril Altmeyer; Editing by Adrian Croft)

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