Segula Acquires the Automotive Engineering Unit of Safran in Spain

/ February 6, 2021/ Aerospace, Automotive, M&As (small under $50m in revenues), Mechanical Engineering, Segula, Spain

French ER&D service vendor, Segula Technologies, acquired the automotive unit of Safran Engineering Services in Valladolid, Spain. The acquired unit is small (with a headcount of 81 engineers). It mostly services Renault.

Segula will set up an automotive engine and powertrain CoE based on the acquired Safran automotive unit in Spain. Segula has some scale in Spain. It has 1,000 employees in the country over 13 sites. The company has 50 clients in automotive, energy, and rail.

The seller, Safran Engineering Services, rings a bell. The company is the ER&D captive unit of aerospace tier-one supplier Safran. Safran Engineering Services is a significant captive, with its 3,700 engineers. Its two largest clients are, we think, Safran and Airbus.

Before the pandemic, Segula had made it clear it focused on the automotive sector. The company acquired a significant part of Opel’s R&D team when PSA took over GM’s Opel business. Despite the sharp drop in automotive ER&D spending, Segula continues to strengthen its automotive specialization.

We have mixed feelings about this transaction. It is small in scale and will not impact much Segula. However, we don’t think that acquiring power-train capabilities now is the right thing for Segula. OEMs are, indeed, shifting their spending toward digital. Also, acquiring R&D captives bring challenges in terms of sale culture and cost structure.

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