Thales Group of France has sold its satellite-navigation division to a group of U.S. private-equity companies led by Shah Capital Partners for $170 million, a move that is in line with Thales’ decision to exit consumer and other non-core businesses, Thales and Shah Capital announced July 20.
The sale of Thales Navigation, to be renamed Magellan Navigation Inc., comes five years after Thales purchased the business from Orbital Sciences Corp. of Dulles, Va., for about $70 million. In addition to the Magellan brand of consumer GPS navigation equipment, the business includes Thales’ joint venture with Hertz for in-car navigation systems and the ProMark GPS surveying equipment line.
Thales Navigation, like Shah Capital, is headquartered in Santa Clara, Calif. Other investors taking minority stakes include Tudor Group, Galleon Management, Consolidated Press Holdings, AIG SunAmerica and Westwood Holdings.
Thales purchased the Magellan business and a 60-percent ownership stake in the Hertz-related navigation service from Orbital in June 2001.
Paris-based Thales, a diversified defense electronics company that is also a shareholder in Europe’s Galileo satellite navigation project, does not break down Thales Navigation’s financial performance in its shareholder statements. The navigation division has about 600 employees.
“[T]he consumer opportunity is key at this juncture” for Thales Navigation, said Jean-Loup Picard, Thales senior vice president for strategy, research and technology, in a July 20 statement. “The nature of consumer business being outside Thales’ strategic focus, we are pleased that the needs of the navigation business will be further served by Shah Capital.”
In its 2005 annual report, Thales said its navigation business posted strong growth early in the year but more recently suffered from pricing pressure in the Magellan division. “Severe pressure on prices for consumer GPS equipment, particularly in the end-of-year season that accounts for a large proportion of sales and profits, eroded operating margins in the navigation business,” the company said.
Ajay Shah, managing partner of Shah Capital, said the new owners expect to build on the Hertz Neverlost and Magellan brand names and “grow the entire business.”
