Britain's QinetiQ buys German air training unit for 70 million euros

LONDON (Reuters) - British defense company QinetiQ QQ.L said it agreed to acquire a Germany-based air training company for 70 million euros ($85.48 million), providing it with exposure to a new and growing European market, and boosting its shares.

The acquired unit, bought from E.I.S. Aircraft Group, provides aerial training services to the German armed forces and the United States Air Force in Europe.

QinetiQ said it was attracted to the unit’s fast growth -- it has reported compound annual revenue growth of 17 percent over the past three years -- and that the deal would be completed on a cash-free, debt-free basis.

Shares in the QinetiQ climbed 5 percent to 237.5 pence to their highest level since December.

“The acquisition enhances international exposure and provides an entry point into the German defense market as that country starts to increase defense spending,” Liberum analyst Rory Smith said.

QinetiQ’s chief executive Steve Wadey said that the company planned to use the business to drive further growth by taking its services and selling them into other markets such as Britain and the Middle East.

QinetiQ’s biggest customer is the UK Ministry of Defence. According to its website, Germany is a new market for the company, which also has operations in Canada, Australia, the U.S., Sweden and Belgium.

($1 = 0.8189 euros)

Reporting by Sarah Young, editing by Louise Heavens