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Hensoldt acquires ESG Elektroniksystem in $728 million deal

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A logo of defense supplier Hensoldt AG is pictured during Hensoldt’s initial public offering (IPO) at the Frankfurt Stock Exchange in Frankfurt, Germany, September 25, 2020. REUTERS/Ralph Orlowski/File Photo Acquire Licensing Rights

Dec 5 (Reuters) – German defence contractor Hensoldt (HAGG.DE) said on Tuesday 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 (LDOF.MI), 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.

($1 = 0.9275 euros)

Reporting by Devika Nair and Disha Mishra in Bengaluru; Editing by Shinjini Ganguli and Maju Samuel

Our Standards: The Thomson Reuters Trust Principles.

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