Aeroflex makes components and systems used in wireless communications and�broadband

Cobham to buy microelectronics expert Aeroflex

Defence supplier Cobham will buy the US maker of wireless systems used in medical scanners and components for the robotic arm on Nasa's Curiosity mars rover.

Cobham said the deal, the biggest in its 80-year history, will see it £548m for New York-based Aeroflex, as well as take on £321m in debt, as it continues to snap up high-end electronics firms in a quest for more commercial customers as its main defence clients cut spending.

Cobham Chief Executive Bob Murphy said the deal for Aeroflex, which makes components and systems used in broadband and wireless communications, would give Cobham a leading position in technology markets where there were high barriers to entry.

"It will also increase exposure to attractive commercial markets including wireless, space, medical and microelectronics," he said.

Some 70 per cent of Aeroflex's revenue comes from commercial markets and 30 per cent from defence and security, whereas Cobham's equivalent split is 35 per cent to 65 per cent.

"The acquisition really helps us change the shape of our portfolio so we continue to get more exposure to growing commercial end-markets, that's what’s going to help us deliver sustainable growth," Murphy told reporters.

Cobham has been trying to expand in commercial markets to make up for declining defence spending from US and European governments. It said last year that it was on the hunt for more deals after buying wireless communications firm Axell Wireless for £85m.

Jefferies analysts said Aeroflex had much in common with Cobham, but was a complex business that could take time to assimilate.

"Nonetheless, it also appears to be a decisive step forwards in implementing Cobham's strategy, something we welcome," they said. "If Cobham can achieve the synergies identified and if - like Cobham – Aeroflex returns to organic growth in FY15, the outlook for the enlarged group will be positive."

Cobham, which employs 10,000 workers covering the commercial, defence and security markets, also makes systems that run radio communications on the Airbus A350 aircraft and on yachts in the Volvo Ocean Race, as well as the video technology used to guide army bomb disposal robots.

Aeroflex, founded in 1937 and based in New York, employs 2,600 people and achieved earnings of £46.6m on sales of £261m in the nine months to the end of March. The business, which has a wireless and microwave testing plant in Stevenage, sells 4G technology and is developing 5G networks for the next generation of smartphones and tablets.

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