USAIRE Conference: External Growth Mechanisms within the Aerospace Industry by Mr. Tristan Sanson, Executive Director at Exane BNP Paribas
By Laurent Arzel & Gerson Araujo (Aerospace MBA Full-Time 18)
Mr. Tristan Sanson presented an overview of the Exane BNP Paribas activities with a focus on mergers and Acquisitions in the Aerospace industry.
Mr. Sanson started with presenting the reasons why institutions invest in Aerospace and Defence. There are several profiles of investors, each one with different objectives: Macro-investors, Long term investors, Income investors, one-shot investors and activist funds. As of today, investing in Aerospace is worthy because representing only 2% of the global equity market (0.4% of European market), and providing the fastest earning of all industrial sectors.
Mr. Sanson gave a focus on Mergers and Acquisitions, by describing the good and bad reasons to do it. On the positive side, M&A allow to consolidate power and control over the market from synergies in terms of revenues and cost savings. M&A enables also the optimization of the supply chain. On the negative side, M&A could be a bad decision when M& serving a political agenda (current french presidential elections may have impact very soon), or when driven by deciders’ego, or by their incentives to gain on absolute earnings growth. And the most problematic situation is when M&A is used to hide issues within the core business.
Mr. Sanson moved then on the hurdles to implement Mergers and Acquisitions based on the fact that many stakeholders have to be convinced: Regulatory bodies, Political bodies, Customers, Employees, and Shareholders. In addition, Investors may have little appetite for M&A, because of the incurred risks: New business plan to be implemented, Industrial complexity, Perception of corporate risk, …
Mr. Sanson concluded that Mergers and Acquisitions is becoming a fashionable topic again, mainly due to the current trend of the Aerospace supply chain consolidation (and as an example, the recent merger between Safran and Zodiac), given that Equity market can support such deal if risks are perceived under control.
Usaire 24 March 2017 Tristan Sanson
