Title: Hensoldt Plans to Acquire Munich-Based Defense Specialist ESG for €730 Million
In a major move, defense electronics group Hensoldt has announced its intention to acquire Munich-based defense and security system integrator ESG, valuing the latter at up to €730 million. This strategic acquisition, expected to close within the first half of 2024, will see Hensoldt finance the deal via a 10% capital increase and a debt of around €450 million, subject to regulatory approval.
ESG's Managing Director and CFO, Katja Ziegler, will depart in March 2025 to pursue new challenges, while current ESG Managing Director Dietmar Thelen will take the reins of Hensoldt's new Multi Domain Solutions division. The acquisition aims to bolster Hensoldt's expertise in defense and security system integration, enabling it to better compete in the multi-domain solutions market.
Expected to generate annual savings of €19 million and increased revenue through complementary sales, ESG's estimated sales for this year stand at around €330 million. Hensoldt expects an annual revenue growth rate in the low double-digit percentage range over the coming years.
With backing from the federal government and major shareholder Leonardo, the union between Hensoldt and ESG looks set to bolster Germany's defense and security sector. However, the acquisition is not without risks, including potential integration challenges and potential challenges from competitors.
Enrichment Insights
The acquisition of ESG Elektroniksystem- und Logistik-GmbH (ESG) by Hensoldt AG is a strategic move aimed at bolstering Hensoldt's capabilities in defense and security system integration. With Katja Ziegler's departure in March 2025, Dietmar Thelen will lead the integration of ESG into Hensoldt's Multi Domain Solutions division, driving operational efficiency and market expansion. The acquisition is anticipated to bring new technological capabilities and expertise, positioning Hensoldt for future growth in the defense and security industries.
[1] Ellwood, R. (2023, March 30). Hensoldt acquires ESG to form new Multi Domain Solutions division. Defense News. [https://www.defensenews.com/electronics/2023/03/30/hensoldt-acquires-esg-to-form-new-multi-domain-solutions-division/]
