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.
Short read
- In 2014, Swiss-based Mistral Engines and German based SkyTrac helicopter technology were acquired for 5 million euros by the Chinese company Elecpro (now: DEA General Aviation).
- Elecpro used to be a manufacturer of household appliances, but has since expanded to the aviation industry.
- By means of this acquisition, Swiss and German technology has been combined to develop drones and unmanned helicopters.
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 euro). The company also acquired the technical assets and prototypes of the German SkyTRAC/SkyRIDER coaxial twin-rotor helicopter project for 2,5 million euro.
In preparation for these deals, Elecpro incorporated AeroSteyr Rotary Sàrl in Switzerland and Elecpro International Investment Holdings Company Limited in Hong Kong. Elecpro used to be 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 its business to the aviation industry. It bought 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. It has wholly-owned subsidiaries in the United States and France. By acquiring the Swiss and German technology, DEA General Aviation not only inherited the historical evolution of the product’s airworthiness certification in European and America, but also direct ownership of core technical assets of coaxial twin-rotor helicopters and aero engines.
Since unmanned aerial vehicles (drones) is dual-use technology, meaning it has civilian as well as military applications, this part of the company was supposed to be separated from the acquisition, due to national concern. However, given the civil purpose uses of the same engine, it went through with non-military aims.
Who owns DEA General Aviation (Elecpro)?
DEA General Aviation is listed on the Shenzhen stock exchange. The majority of the company’s shares are publicly traded. The largest shareholder is Beijing Wutong Xiangyu Investment Co (24,66%), an investment company that is ultimately owned by several private persons. The other shareholders can be traced back to private persons as well. There are no government related investment funds as shareholders in the company. 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 euros. This company produces EASA certified full-carbon aerobatic and sport aircrafts and provide technology for fixed-wing aircrafts. 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 euros.
The aviation sector has been a strategic sector for technology acquisitions. Already in 2009 China’s state-owned Aviation Industry Corporation of China acquired Austria’s Fischer Advanced Composite Components and acquired Germany’s Thielert Aircraft Engines in 2013.