HENSOLDT acquires ESG Elektroniksystem- und Logistik-GmbH


The HENSOLDT Group announced that it has signed a definitive agreement to acquire ESG Elektroniksystem- und Logistik-GmbH (“ESG”), from an investment vehicle managed by Armira Beteiligungen GmbH & Co. KG (“Armira”). ESG is a leading platform-independent systems integrator as well as established technology and innovation partner for defence and security. With the acquisition of the highly complementary defence technology business of ESG, HENSOLDT expands its business with strong design and systems integrator capabilities.


Thomas Müller, CEO of the HENSOLDT Group, says: “The acquisition of ESG is an excellent fit with our overall strategy and accelerates HENSOLDT’s development as a solution provider for defence and security. By combining highly complementary capabilities from HENSOLDT and ESG, we are taking a decisive step towards becoming a leading European provider of seamlessly integrated solutions. This will put us in an ideal position to meet the existing and future requirements of our customers around the world.”


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Christian Ladurner, CFO of the HENSOLDT Group, says: “The acquisition of ESG is an excellent opportunity to take our business to the next level. ESG exhibits strong growth and cash conversion given its capex-light business model. We have identified significant cost and revenue synergies which will drive attractive value creation while maintaining our discipline in capital allocation and net leverage.”

Advanced software engineering and systems integration capabilities with high profitable growth

Founded in 1967, ESG is a platform-independent systems integrator and technology and innovation partner for defence and public security. ESG develops, integrates, supports and operates highly complex, security-related electronic and IT systems for defence and security. The company serves the defence and security needs of German and foreign armed forces, public authorities and companies. ESG has been able to establish itself as a strong German systems design and integration house, playing a vital role in major current and future programs such as FCAS (“Future Combat Air System”) and F-35. Today, the company employs 1,380 people in Germany, the Netherlands and the USA with exceptional technological expertise.

For 2023, the company’s revenue is expected to be approximately EUR 330 million in accordance with IFRS, with annual growth in the low double-digit percentage range and an EBITDA margin of approximately 14%, generating strong cash flows, with maintenance capex under 1.5% of revenue.


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Highly complementary defence technologies

Adding ESG’s solution portfolio will enable HENSOLDT to combine knowledge of customer ConOps (“Concept of Operations”), certifications and engineering know-how to develop smarter solutions in a faster way, in particular the digitalization of the battlefield and development of integrated network solutions. Potential examples would include areas such as Ground Based Air Defence, Signals Intelligence, Command and Control as well as enhanced solution capabilities in various airborne and naval campaigns. In addition, it will create new opportunities in platform lifecycle services deepening HENSOLDT’s offering across training, logistics and maintenance for own and third-party installed bases. Finally, the combined company will also be a strong support partner for systems procured in the USA and Israel, ensuring long-term systems support and further development in Germany.

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Acquisition accelerates HENSOLDT’s sensor solutions strategy

Integrating ESG’s software engineering and systems integration capabilities will support HENSOLDT’s positioning as a comprehensive solutions provider. ESG brings expertise in intelligent data networks to integrate HENSOLDT sensor systems across domains, creating critical integrated solutions for multi-domain operations. Given the highly complementary skillsets, strong cultural fit and stakeholder support, the combined group is ideally positioned to accelerate its international growth based on the track records and growth trajectories of the two companies, while remaining firmly rooted in Germany and protecting national security interests.


Attractive value creation and prudent financing

HENSOLDT is acquiring 100% of ESG for an enterprise value of EUR 675 million plus an earn-out of up to EUR 55 million based on specific performance targets to 31 December 2024.

HENSOLDT expects to generate EUR 19 million run rate annual cost synergies in addition to revenue synergies from cross-selling and combined positioning for future pipeline opportunities.

The acquisition value including the earn-out implies an EV/EBITDA 2024E of ~10x post run-rate cost synergies and ~14x excluding run-rate cost synergies. In addition to the strong strategic rationale the transaction is expected to be highly financially accretive:

  • Accretive to HENSOLDT stand-alone revenue growth and FCF generation.
  • EPS accretive by year 2, including cost synergies only, and double-digit accretive by year 4, including cost and revenue synergies.
  • ROIC (“Return on Invested Capital”) over WACC (“Weighted Average Cost of Capital”) by year 4, including cost synergies only, and by year 3, including cost and revenue synergies.

HENSOLDT intends to finance the acquisition through a capital increase from authorized capital of up to 10% of the current share capital and new debt in the amount of approximately EUR 450 million. The Federal Republic of Germany, indirectly acting through Kreditanstalt für Wiederaufbau (KfW), holding 25.1% of the shares in HENSOLDT, intends to participate in the potential capital increase pro rata to its shareholding quota.



The acquisition is expected to be completed in H1 2024, subject to certain conditions, including obtaining necessary regulatory approvals.

HENSOLDT is advised by Deutsche Bank AG as financial advisor and Gleiss Lutz and Hengeler Mueller as legal advisor.



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