By Robert Wall

LONDON -- French aerospace supplier Safran SA Thursday defended its proposed EUR8.5 billion ($9 billion) acquisition of plane cabin-interiors specialist Zodiac Aerospace SA after activist hedge fund TCI Fund Management this month raised objections to the deal.

Safran Chairman Ross McInnes said that the planned acquisition "fits perfectly with the outline of our strategy" and that "its financial parameters are in line with other comparable transactions."

In a letter to TCI Chief Executive Christopher Hohn, Mr. McInnes rejected the hedge fund call for Safran to scrap the deal and pursue a EUR3 billion share repurchase.

Safran in January announced a plan to buy troubled Zodiac Aerospace to become the world's No. 3 aerospace supplier to Boeing Co. and Airbus SE behind United Technologies Corp. and General Electric Co.

Safran said it would pay EUR29.47 a share for Zodiac in a tender offer. If 50% of shares are tendered, the companies will merge based on an exchange ratio of 0.485 a Safran share for each Zodiac share. The structure will allow Zodiac's family shareholders and two institutions to remain investors in the combined company.

Safran also would pay a EUR5.50-a-share special dividend to its shareholders before the deal closes.

TCI, which said it owns almost 4% of Safran shares, on Feb. 14 said that Safran was "significantly overpaying for Zodiac."

Mr. McInnes said the purchase of Zodiac had the potential "to create value over time as well as an immediate return on investment for shareholders through the payment of a special dividend."

TCI also objected to the structure of the shareholder approval process for Safran's purchase of Zodiac in a letter to both the French aerospace supplier and the French stock-market regulator, the Autorité des Marchés Financiers or AMF.

Mr. McInnes defended the process. TCI's demand for shareholders to get a vote before the tender offer was made had no basis in French corporate law, the Safran chairman said, adding that it was "out of line with sound governance principals."

TCI couldn't immediately be reached for comment.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

February 23, 2017 13:27 ET (18:27 GMT)

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