Participate, Profit & Celebrate:
Q.: The global aerospace and defense industry has been consolidating over the past two years. Do you foresee a continuation of this trend?
Mr. Sandehed: Yes, I believe that the consolidation will continue, mainly driven by defence budget cuts and the unstable financial climate in Europe and the U.S. Even though the market conditions are challenging Saab has a good position and perhaps the best product portfolio ever.

We continuously evaluate our portfolio and our strategy. In order to grow we need to invest in certain areas not others. If we decide that an area is no longer core for us we decide to dispose the asset. We have continued to improve our efficiency and performance and have also divested non-core assets during the past year, which has resulted in an increased net cash position. We have a strong balance sheet and strong cash flow. Our net cash position gives us the opportunity to use existing cash to fund any possible acquisition. For example, we funded the acquisition of Sensis through existing cash.
Q.: What are the underlying elements driving the M&A deal activity in the defense sectors?
Mr. Sandehed: Firstly you always need to strengthen your competitiveness and to get access to new markets. Another element is probably the unstable financial climate, where several markets are facing financial difficulties, such as the U.S. and the UK. However, this is also a great opportunity for companies that can provide cost efficient solutions since many governments and other customers are reviewing their purchase plans to reach more cost efficient solutions.

At Saab, we believe in efficiency in terms of costs as well as production and project execution management. This means that Saab's is able to offer products and solutions that are both cost efficient and does the job. Gripen, a single engine fighter aircraft is a clear example.
Q.: Can you clarify what is the key determinant for strengthening competitive position globally?
Mr. Sandehed: The way to strengthen your competitive position is being able to offer the right, and in demand, products and solutions, as well as being established in markets that are interested in what you’re offering. These are the key issues behind our M&A activity. However, the financial instability in parts of the world is both a threat and an opportunity.
Q.: In terms of the company's strategic growth plans, what business areas are a priority for Saab to grow either organically or via acquisition?
Mr. Sandehed: Our plan is that all of our business areas shall grow organically. Acquisitions are an add-on, and the basic principle is that if we acquire a company it shall strengthen our current product portfolio or provide a stronger market presence. Preferably both, as was the case with Sensis. The consideration is of course also an important factor.
Q.: How does the Saab team evaluate acquisition opportunities across its five core businesses in terms of organizational structure?
Mr. Sandehed: It works both ways, i.e. both from the head office and from each business area. The main thing is that the potential acquisition strengthens our current product portfolio and/or provides a stronger market presence. It's teamwork between the business areas, the strategy department and the M&A team.
Q.: In your view, is it important to have an in-house M&A team for global companies?
Mr. Sandehed: Yes, I believe it is important to have an in-house M&A team, but I'm of course biased since I'm the head of group corporate investments. We have a team on a corporate level that works solely with M&A, and we also have staff working with these matters in each business area as well.
Q.: Are potential targets identified internally, or by external sources or both?
Mr. Sandehed: It works both ways. We at the group level and in the business areas are carefully watching our competitors and the overall market to assess what products and solutions that are in demand, will be in demand and where they are and will be in demand. But we also receive suggestions from external parties such as investment banks.
Q.: What geographical markets will remain a priority for Saab in the next 18 months?
Mr. Sandehed: Our prioritized geographical markets are India, Thailand, Brazil, North America and the EU. We believe that the strongest growth opportunities lies within emerging markets, but actually also in more developed ones, like the U.S. and the UK. The reason for the latter ones is that they are currently in a restructuring phase of their defence and security budgets.
Q.: While UK; US and EU restructure their defense budgets; what specific areas do you anticipate will present growth prospects over next 2 years?
Mr. Sandehed: First of all it's a challenging market out there. In the U.S. and parts of the EU budgets are shrinking with an increased demand for cost efficiency, which I believe gains us. However, emerging markets are growing, India being a clear example with a budget increase amounting to over ten percent in 2011-2012 according to finance minister Pranab Mukherjee. Specific areas that we believe have clear growth prospect are civil security, training, intelligent surveillance, support and services and the commercial air market, including Air Traffic Management. And, we continue to leverage on our competitive advantages being cost efficiency, robust systems and solutions.
Q.: Saab has expanded its presence in India the last few years. Can you shed light on the Mahindra-Satyam joint venture?
Mr. Sandehed: We're in India for the long-term and have entered into an agreement with Mahindra Satyam to establish Saab India Technology Center, a decision that strengthens our relationship with the Indian market. The aim with Saab India Technology Center is to identify programs and technologies that can be of interest for us and the global market. The center will provide a platform to facilitate development of aerospace and defense projects in India.
Q.: Given the priority of growing in the developing and emerging markets, what are the biggest transactional risks in these markets?
Mr. Sandehed: Iâ'd say cultural differences and unclear goals.
Q.: Congratulations on successfully acquiring the U.S.-based technologies provider, Sensis Corp. What was the rationale for executing the deal?
Mr. Sandehed: Thank you. The main reason behind the acquisition is that Sensis strengthens our offer within radar, sensors and Air Traffic Management solutions as well as a establishing a stronger market presence globally, especially in the U.S. The acquisition of Sensis is a further step in our long term strategic plan for growth in the North American market and provides a strong growth platform from which we can build on the combined installed base and excellent skills in systems engineering, design and integration.

We also believe that the coupling of Sensis' and Saab's broad portfolios of advanced Air Traffic Management solutions creates comprehensive and world-leading solutions in the market place. May I also add that Saab and Sensis have a demonstrated record of successful cooperation with a joint win on the Littoral Combat Ship Program supplying the advanced Sea Giraffe Radar to the US Navy's newest and most advanced littoral combat ship.
Q.: How important is it to have an integration plan in place during the pre-negotiation process? What are the unique considerations for integrating teams in a cross-border deal?
Mr. Sandehed: I think that it is very important to have an integration plan in place on an early stage in the process, and one of the most important considerations for integrating teams in a cross-border deal is to communicate with each other and let any cultural differences aside.
Q.: In closing, what book are you currently reading?
Mr. Sandehed: Hundraaringen by Jonas Jonasson (you laugh all the time).

SEE more profiles by clicking on the listed industry categories.