Strategic Chinese acquisition in European dual-use aviation technology: the case of Mistral Engines

At Datenna, our China experts continuously track and conduct detailed investigations into the acquisitions of European and US firms by Chinese entities. Through a series of articles in our resource library, we highlight striking acquisition case studies, analysed based on Datenna's in-depth, unique data on China's techno-economic landscape. This article elaborates on the acquisition of Mistral Engines (MESA) in Switzerland.

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From Rice Cookers to Aviation

In 2014, Elecpro (also known as Guangdong Yilipu Electric) acquired 85.6% of the shares of Swiss company Mistral Engines SA (MESA) for 21.9 million RMB (approximately €2.5 million). The company also acquired the technical assets and prototypes of the German SkyTRAC/SkyRIDER coaxial twin-rotor helicopter project for €2.5 million.

In preparation for these deals, Elecpro incorporated AeroSteyr Rotary Sàrl in Switzerland and Elecpro International Investment Holdings Company Limited in Hong Kong. Elecpro had previously been solely focused on the production and sale of rice cookers, water boilers, and other small household appliances. In 2013, it set out a strategy to expand into the aviation industry, acquiring sister company Deao Helicopter Co from parent company Beijing Wutong Xiangyu Investment Co. In June 2015, Elecpro changed its name to DEA General Aviation and officially expanded its business scope from household appliances to aviation.

Aircraft Engine Technology

Mistral Engines develops and manufactures engines for light aircraft, helicopters, and unmanned military vehicles, with wholly-owned subsidiaries in the United States and France. By acquiring the Swiss and German technology, DEA General Aviation inherited both the historical airworthiness certification of the products in Europe and America, and direct ownership of the core technical assets of coaxial twin-rotor helicopters and aero engines.

Since unmanned aerial vehicles (drones) constitute dual-use technology — with both civilian and military applications — this part of the company was originally intended to be separated from the acquisition due to national security concerns. However, given the civil-purpose uses of the same engine, the acquisition proceeded on the basis of non-military aims.

Who Owns DEA General Aviation?

DEA General Aviation is listed on the Shenzhen Stock Exchange, with the majority of shares publicly traded. The largest shareholder is Beijing Wutong Xiangyu Investment Co. (24.66%), an investment company ultimately owned by several private individuals. The other shareholders can also be traced back to private persons. There are no government-related investment funds among the shareholders. DEA General Aviation is the sole owner of Deao Helicopter Co.

Cooperation and Further Acquisitions

In 2015, DEA General Aviation used its German subsidiary Rotor Schmiede GmbH to acquire XtremeAir for €3.6 million — a company producing EASA-certified full-carbon aerobatic and sport aircraft and providing technology for fixed-wing aircraft. In 2016, DEA General Aviation used another German subsidiary, AeroSteyr Engines GmbH, to acquire Hirth GmbH, a UAV propulsion specialist offering 2 to 4-stroke engines for UAV and ultralight applications, for €4.5 million.

The aviation sector has been a consistent target for Chinese technology acquisitions. As early as 2009, China's state-owned Aviation Industry Corporation of China (AVIC) acquired Austria's Fischer Advanced Composite Components, and acquired Germany's Thielert Aircraft Engines in 2013.