After a year of talks and some extra cash, satellite communications expert Cobham has won the hand of Danish rival Thrane & Thrane (T&T). Now minus their obstructive chairman, a slightly improved £275m bid was enough to convince management and, crucially, founder and 22.7 per cent shareholder Lars Thrane, to back Cobham's offer. Institutions have already sold Cobham almost a quarter of the business, so this is a done deal.
And so it should be. Cobham has paid a full price – 2.4 times last year's sales and over 15 times operating profit – for a business that will only be "moderately" accretive to earnings in 2012. Still, an estimated annual cost saving of at least £4m is double initial estimates and, importantly, T&T further dilutes Cobham's exposure to US defence spending – almost 60 per cent of its sales come from commercial maritime work and less than a fifth from North America. Cobham has the firepower for more of this, too. It said as much in a recent trading update that also revealed modest growth in both first quarter sales and the order book.
