A picture of the EADS' logo.
Aerospace and defence giant EADS NV is using the friendly acquisition of Toronto-based Vector Aerospace Corp. to kick-start a global move into aircraft maintenance and repair.
Europe's largest aerospace company, whose subsidiaries include commercial jet maker Airbus SAS, views the proposed $625-million takeover as a key step in its attempts to diversify. EADS hopes to offset the cyclical manufacturing side of the aerospace business and reduce its reliance on the euro by expanding into the less volatile services market.
For Vector, the deal - announced Monday - will open up new markets in fast-growing regions such as China and India, where the company has little or no presence.
Vector shares soared 13 per cent Monday on the Toronto Stock Exchange on the disclosure of the takeover agreement.
Chris Murray, an analyst with PI Financial, said the $13-a-share offer was a "fair price."
"This is what good-quality companies in this sector have been going for," he said in an interview. Mr. Murray said in a research update that he does not expect any other bids for Vector to materialize.
EADS' helicopter division, Eurocopter Holding, will be the operating unit that will acquire Vector, subject to shareholder and regulatory approvals.
"This is an important acquisition for Eurocopter," Boris Zaitra, EADS' head of mergers and acquisitions, said in an interview.
"It positions us very well in North America and allows for a base to build on through other potential acquisitions."
Mr. Zaitra said EADS intends to keep Vector's independence, name and management team in place. It also wants to maintain the 50/50 split at Vector between the civilian and military sectors.
EADS' goal is to increase services as a proportion of total revenues to 25 per cent in 2020 from 12 per cent in 2009, he said.
Vector president and chief executive officer Declan O'Shea said the deal offers the chance to break into new markets and continue on a steady growth path while benefiting from the larger firm's high profile.
"They have a very large footprint. They are in parts of the globe we don't have people in," Mr. O'Shea said on a conference call Monday.
"What they offer is a large brand that can help us get access to markets we wouldn't have had before."
Vector has facilities in Canada, the U.S., Britain and Africa. It services a range of gas turbine engines, components and helicopter airframes for commercial and military customers.
Customers include Bell Helicopters, Pratt & Whitney Canada, General Electric, Boeing Co. and EADS subsidiaries.
Mr. O'Shea said Eurocopter intends to integrate Vector in a manner "very much at arm's length."
Last Thursday, the two companies unveiled an exclusive agreement for talks aimed at a takeover proposal.
Vector said in a news release Monday that the takeover offer has the board's unanimous approval and that the $13-a-share bid represents a premium of about 15 per cent over last Friday's closing price.