March 18, 2016 / 7:13 PM / 2 years ago

KKR to buy Airbus defense electronics unit for $1.2 billion

PARIS (Reuters) - Private equity firm KKR (KKR.N) has agreed to buy Airbus Group’s (AIR.PA) defense electronics business for 1.1 billion euros ($1.2 billion), the European aerospace group said on Friday.

A flight test engineer holds an Airbus Group flag after the first flight of the Airbus A320neo (New Engine Option) in Colomiers near Toulouse, southwestern France, September 25, 2014. REUTERS/Regis Duvignau/Files

The transaction is expected to close in the first quarter of next year, Airbus said in a statement, adding it may keep a minority stake.

“Defense Electronics is a strong, profitable business with significant growth potential, and we are convinced that KKR and the Defense Electronics management team and employees will continue to strongly develop the business,” Bernhard Gerwert, head of Airbus Defense and Space, said.

Europe’s largest aerospace group is selling several businesses to focus its defense division on warplanes, missiles, launchers and satellites in the face of low defense spending in Europe. It wants to dispose of assets with combined annual revenue of around 2 billion euros.

The deal went ahead after Airbus excluded its border security business from the planned sale, having missed its goal of reaching a deal by early 2016 because of delays with a border project in Saudi Arabia.

The defense electronics division includes around 4,000 employees worldwide, with annual revenues of around 1 billion euros, Airbus said. The business comprises military sensors, electronic warfare, avionics and optronics.

Reporting by James Regan; Editing by Mark Potter

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