MBDA Buys Germany’s LFK

European missile maker MBDA signed June 15 an agreement with the EADS to buy its 81% stake in Germany’s LFK-Lenkflugkorpersysteme GmbH DBA as EADS/LFK. MBDA already owns the other 19%, thus giving it 100% ownership of the German firm. Germany is the third largest missile market in Europe, and the former EADS/LFK has a 25% share of the multi-billion MEADS project.

Of course, it’s more complicated than that. EADS holds 37.5% of MBDA, while BAE Systems of Britain holds 37.5% and Finmeccanica of Italy holds 25%. A Boeing 2003 chart may help make sense of some of the tangled ownership structures in Europe’s defense sector. Defense Systems Daily also has a text briefing updated as of May 31, 2005.

The deal, which was originally expected to be signed in mid-2004, was signed at the 2005 Paris Air Show at Le Bourget Airport near Paris by MBDA chief executive Marwan Lahoud and Thomas Enders, the head of EADS’s Defense division. Financial terms of the sale were not disclosed. Subject to the respective Board and regulatory authority approvals, the transaction is due to be completed later this year. The transaction will be effective from 1st January 2005.

Under the terms of the Understanding, there will be no change to the current MBDA shareholder agreements and LFK is expected to continue to operate as a legal entity. The company will become, however, fully integrated into MBDA post completion. Some analysts have characterized LFK as unprofitable, however, and noted that it carries a heavy debt load.

Integrating LFK is another step in the integration of the European missile industry, a process initiated by the creation of MBDA in 2001 by the missile group’s three shareholders, BAE SYSTEMS, EADS and Finmeccanica. MBDA is now the world’s second leading missile manufacturer after U.S.-based Raytheon, with sales of EUR 3.1 billion (USD $3.7 billion) in 2004.

See also:

• MBDA news release (June 15, 2005)

• Agence France-Presse (June 15, 2005) – MBDA To Buy 81 Pct Stake In Germany’s LFK From EADS