Exxelia is a manufacturer of complex passive components and precision subsystems. The products, capacitors, inductors, transformers, resistors, filters, position sensors, slip rings, and precision mechanical parts, serve many high-tech industrial fields such as aviation, defense, space, medical, rail , energy and telecommunications.
Exxelia is a member of the BITD and a critical supplier for the defense industry. A sector which, with aeronautics and aerospace, contributes to three quarters of its activity. Its passive components are used to withstand extreme conditions in terms of temperature, atmospheric pressure or vibration. In aeronautics, Exxelia is on board the Airbus A350, the Boeing Dreamliner, the Ariane 6 launcher, satellite constellations (Galileo, Oneweb…), the Rafale, the F-18 but also the F-35 .
It has 13 production sites in France, Morocco, the United States and Vietnam, has more than 2,000 employees for a turnover close to €200 million in 2021. At least August 2022, IK Investment Partners (majority shareholder) enters into exclusive negotiations with the American group Heico for the sale of the Exxelia group. After Alstom, Alcatel, Technip, Lafarge, Morpho, Latécoère, Souriau, HGH and many others, it is very likely, barring a last-minute twist, that we will witness the loss of part of our national sovereignty by a new weakening of our BITD.
Capital chronology of a French industrial group with century-old origins
The Compas Group brings together the companies Eurofarad (created in 1952), Firadec (1960) and SIC-Safco (1921), all three specializing in capacitors and suppliers for strategic French markets.
In 2004, the Compas Group decided to sell its stake to Qualium Investissement (CDC). After building a factory in France, taking over production resources in Morocco (Astema) and achieving external growth in the field of passive magnetic components (Microspire), Qualium Investissement decided to merge these five complementary companies in 2009 and create the group Exxelia, which at that time employed 900 people and recorded a turnover of approximately 70 million euros.
In 2010, Qualium Investissement sold Exxelia to LBO France for €175 million.
The Exxelia group continues its international development through external growth (US, France) in the field of passive components as well as through establishments abroad (Vietnam). The acquisition of TEMEX Ceramics in 2012 (also 90% owned by LBO France since 2005) and direct competitor of Eurofarad since 1971, allows Exxelia to have all of the French know-how in the field of ceramic capacitors, components strategic electronics used in the military and space sectors.
In 2014, LBO France sold its stake to IK Investment Partners (UK) at a valuation of around €275,000. Exxelia then employed 1,200 people for a turnover of €115 million.
From 2014 to 2020, Exxelia achieved several external growths, three quarters of which in the US to reach 2,100 employees and a turnover close to €200 million in 2021.
In January 2020, IK Investment Partners launched exclusive discussions with the HLD fund (held by French industrialists) with a view to selling its stake at a valuation of around €500m. This initiative will abort the same year with the reason given for the arrival of the COVID19 pandemic.
In June 2022, IK Investment Partners decides to put Exxelia up for sale, mandates the Rothschild & Co bank and enters into exclusive negotiations with the American group Heico in August around a proposal of the same order of magnitude as the amount discussed two years before with the HLD group.
A half-hearted political response that does not meet the challenges
Between lack of realism on the level of economic protectionism of American laws dealing with exports, confidentiality of the procedures for examining offers and controversy between the National Rally and Bercy, the Exxelia file seems much worse off than the case of Photonis treated two years earlier.
Indeed, on 09/20/2022, Rolland Lescure, Minister Delegate to the Minister for the Economy, Finance and Industrial and Digital Sovereignty, in charge of Industry, tried to qualify things during the Business Committee of the National Assembly, indicating that Exxelia had until now been held by an English fund which did not prevent the State from ensuring that its sovereignty in the domain was respected. It is nevertheless to be feared that Mr. Lescure forgets that the extraterritoriality of American law through ITAR is more restrictive than that of England. He continues by recalling that the State exercises its right of scrutiny, dodging the substantive debate by highlighting the potential existence of confidential elements that do not authorize him to comment further on the file.
Also, on 05/10/2022, Sébastien Lecornu, Minister of the Armed Forces questioned on the subject gave the floor to the director of the DGA who will coolly indicate that given the constraints of the investment fund IK Investments Partners, it is normal that Exxelia is for sale while specifying that the sale process was still in progress and that French offers, recently received, were being studied. He will also add that if no credible proposal emanated from a French buyer, the transfer would continue with Heico, very favorably known to the ministry, which will have to provide all the guarantees necessary for the compartmentalization of its activities, in order to preserve the sovereignty of the state in the supplies of this company vis-à-vis its weapon systems.
Then, on 11/10/2022, the Minister for the Armed Forces will inform the Committee on Foreign Affairs, Defense and the Armed Forces that Exxelia has activities which are of direct interest to the State from a strategic point of view and that the teams of the DGA and its cabinet are currently holding rounds to defend French interests.
The same day, at the National Assembly, a violent pass between the Deputy RN Alexandre Loubet and the Minister Bruno Le Maire, the first calling the second a coward given his inaction to block the takeover of Exxelia by Heico, plunges the debate into controversy, de facto dismissing the root of the problem. Finally, on 21/11/2022, the RN will ask to apply the decree relating to foreign investments in France to protect Exxelia.
An unexpected initiative that refocuses the debate on the substance
On October 24, 2022, the non-partisan association “La France ensharing”, wrote, through its President Maitre Carine Chaix, an open letter to Bruno Le Maire, co-signed by two generals (2S). This letter recalls that allowing Exxelia to be subject, even partially, to United States legislation and its power to control the use of Rafale or nuclear submarine equipment is to make it dependent Americans the supply of French armed and nuclear forces.
But above all it repositions the subject on the merits by re-specifying on the ground of law, that the Minister of the Economy must, since the decree of Dominique de Villepin, protect the strategic activities of France and quotes articles L. 151-3 and -10 of the CMF recalling the injunction which is made to him to refuse an authorization of foreign investment if the national interests cannot be preserved. This initiative, little publicized, has the merit of getting out of the controversy between Bruno Le Maire and the RN by repositioning in a simple way the stakes and the obligations of the decision-makers on this file.
An unfortunately inappropriate context to keep Exxelia French
Regarding the potential buyer in 2020, the HLD fund: it is very likely that after having taken over Photonis in 2021 at a valuation of €370m following the French veto on the acquisition of the American Teledyne, it will no longer be able to position itself on the Exxelia file. Especially since some have concluded that the withdrawal of the file by HLD in 2020 due to a pandemic was only a pretext to hide “a wolf”. Then at the macroeconomic level: monetary parity and gas prices accentuate the power of American predators in the acquisition of national strategic nuggets. Finally, the management of Exxelia, although led by a former Thalès, welcomed Heico’s offer through the prospects it offers to Exxelia in terms of development while indicating that it appreciates the values of its shareholder (the family Mendelson).
In a context where the Minister for the Economy, in charge of national sovereignty, has not explicitly positioned himself against the takeover of Exxelia, that the shareholder LBO France is satisfied with Heico’s offer and that the management is in working order to continue the adventure under the American flag, the task will be difficult for the DGA to convince the state to put down its veto to favor a French or European offer as in the case of Photonis. It is therefore very likely, barring a particular event that would upset the current balance of power, that Heico will take control of Exxelia during the first half of 2023, accompanied by a press release from the DGA or Bercy which will explain that security guards Many will be put in place to safeguard France’s sovereignty in the supply of strategic passive electronic components.We will remember the promises made at the time of the Alstom affair to remember that unfortunately they only bind those who believe in them.
Rémi Noguéra (MSIE 40 from EGE)