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Thales SA, Europe’s largest defense electronics group, is eager to make more acquisitions despite its recent €4bn buying spree. The company’s CEO, Patrice Caine, stated that Thales can still invest in mergers and acquisitions across its business segments. However, the immediate focus will be on integrating the recently acquired companies.
In a surprising move, Thales announced three acquisitions in quick succession, including the purchase of US cyber security group Imperva for $3.6bn. Caine emphasized the importance of integrating these companies to demonstrate value creation to investors. Additionally, Thales remains open to potential future opportunities in areas such as cyber security, aerospace, defense, and space.
Thales has been steadily expanding its cyber security activities and aims to reach €2.5bn in sales by the end of 2024. Despite the acquisitions, Thales assures shareholders that dividend payouts and buybacks will not be compromised. The company’s leverage is expected to remain manageable with the divestment of a business to Japan’s Hitachi for €1.6bn.
Analysts view Thales’ recent acquisition spree as potentially limiting future buybacks after March 2024. However, Thales maintains a strong position in the French corporate defense landscape, providing technology and software for both military and civilian applications. The company’s largest shareholders are the French state and Dassault Aviation.
Thales has benefited from increased defense spending by governments following the war in Ukraine. The company is also exploring opportunities to support and service its equipment being used in Ukraine. However, the conflict has prompted discussions on whether European countries should develop joint weapons programs or continue relying on US manufacturers.
Thales remains optimistic about the future, despite challenges in achieving deeper defense cooperation among EU countries. The company cites successful examples of collaboration, such as its work for the British and French naval forces.
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