The flight simulator specialist CAE sells its health division to the American company Madison Industries.
The transaction, announced Tuesday, is valued at $311 million. It will allow the Montreal company to reduce its debt and concentrate on its activities in civil aviation and the defense sector.
CAE’s healthcare division was a relatively small part of the company at less than 3% of earnings before interest, taxes, depreciation and amortization (EBITDA). “This decision to review our portfolio places CAE in a better position to effectively allocate capital and resources to take advantage of the many attractive growth opportunities on the horizon,” explains President and CEO Marc Parent, in a press release.
Among these identified opportunities, the flight simulation industry will need to train nearly 300,000 pilots “in the coming years” while the tense geopolitical situation increases demand for the defense segment, said the vice-president of business. company, Samantha Golinski, in interview.
Analyst Tim James of TD Securities believes CAE got a good price. He emphasizes that the profitability of CAE Santé, created in 2009, was “volatile”. “The sale price suggests that the value of the company is 18% higher than our estimates,” he reacts.
CAE’s debt represented 3.22 times its earnings before interest, taxes, depreciation and amortization (EBITDA) as of June 30. Mr. James believes the transaction would result in a reduction in the ratio equivalent to 0.25 times EBITDA.
The time was right to sell the health division which is “doing well”, believes CAE management. Madison Industries was the right investor to take the division “to another level,” says Mme Golinski. “We needed someone to invest in the next part of this adventure. »
The founder and CEO of Madison Industrie, Larry Gies, says in a press release that he intends to grow CAE Health’s activities “rapidly”.
CAE Health has 600 employees, 123 of whom are based in Quebec. The company has 13,000 employees in total.
Both companies estimate that the transaction will be completed by the end of March 2024.
CAE shares gained 59 cents, or 2.07%, to $29.12 on the Toronto Stock Exchange late in the morning.