German defence contractor Hensold said it acquired defence systems integrator ESG Elektroniksystem for an enterprise value of 675 million euros ($727.79 million), along with an earn-out of up to 55 million euros.
Hensoldt’s key shareholders, Germany and Italy’s state-controlled defence and aerospace group Leonardo, also support the deal. It expects nearly 19 million euros in run-rate annual cost synergies in addition to revenue synergies from cross-selling.
The defence company intends to finance the acquisition through a potential capital increase of up to 10% of its current share capital and new debt of about 450 million euros.
Leonardo will not be participating in the capital increase but Germany, through state lender KfW, which holds a 25.1% stake in Hensoldt, intends to participate.
ESG is a manufacturer-independent systems integrator and technology and innovation partner for defence and security.
The acquisition is expected to be completed in the first half of 2024.
