Defence

SAMI acquires AEC

Posted 25 June 2019

Saudi Arabian Military Industries (SAMI) has announced the signing of a Term Sheet Agreement to acquire 100% ownership in Advanced Electronics Company (AEC), which took place at a Saudi Arabia–UK industry event in London in the presence of senior shareholder representatives, including His Excellency Ahmed Al-Khateeb, Chairman of SAMI and Sir Roger Carr, Chairman of BAE Systems.

Courtesy SAMI

SAMI's investment in AEC, the Riyadh-based private sector firm specialising in engineering, development, manufacturing, repair and technical support across defence, Information Communications Technology (ICT), energy, cybersecurity and high-tech fields, at the local, national, regional, and international levels, comes as part of SAMI's ongoing efforts aimed at increasing local defence manufacturing in the Kingdom, in line with the directives of the Saudi Vision 2030.

HE Ahmed Al-Khateeb, Chairman of SAMI, said: "The foundation for the institution and growth of SAMI was laid three years ago with the announcement of the Saudi Vision 2030. SAMI's journey began in 2017 and since then we have forged ahead with the backing of our country's leadership, steadfast efforts of our team and support of our partners. Today's agreement marks a significant milestone for us, as we advance our efforts to build a strong, dynamic and sustainable military industries sector in Saudi Arabia."

HE Al-Khateeb added: "Defence electronics is a mission-critical element of the defence sector and the acquisition of AEC firmly establishes SAMI's presence on the global defence industry map. Furthering our aspirations in the sector, it will help us drive local content and stimulate economic growth."

Established in 1988 under the Saudi Economic Offset Programme and under the ownership of a number of companies, including international defence, aerospace and security company BAE Systems, AEC has played a pioneering role in the fields of modern electronics, manufacturing, system integration and repair and maintenance services for nearly three decades, thereby becoming a major regional player renowned for innovation.

AEC specialises in the design, development, manufacturing, maintenance and repair of several advanced industry and military electronic systems, devices and equipment such as smart electricity and water meter systems, security protection systems for the vital infrastructure, industrial control systems, sight systems for the Typhoon aircraft, jammer and interference systems for the F-15 aircraft, electronic units for the F-16 aircraft, land equipment and training simulators for the Hawk 165 aircraft and sight systems for the Tornado aircraft, among others.

AEC's evolutionary growth has seen the company play a key role in localising military manufacturing, deploying smart technologies and accelerating industrial and commercial growth, while maintaining a Saudisation rate of over 80% and 100% completion rate across more than 1,000 projects. AEC has developed its own framework, Aligned Integrated Methodology (AIM), which provides a standardized approach to governance and delivery, and comprises methodologies in Portfolio, Program and Project Management.

Over the past few years, AEC has witnessed a steady growth in its sales year on year, with net sales in 2018 rising to SAR 2.07 billion, compared to SAR 1.925 billion in 2017 and SAR 1.65 billion in 2016.

Following the acquisition, AEC will form the core of establishing SAMI's original equipment manufacturer (OEM)-agnostic defence electronics and indigenous defense technology solutions business division, cutting across all of its business streams. In addition, SAMI's total number of employees will significantly increase to reach 2,200, as a result of the acquisition.

In addition to facilitating Transfer of Technology (ToT), boosting local production and deepening engineering, design, development, maintenance, repair and overhaul (MRO) work, the acquisition will enable SAMI, through AEC, to develop its own mature products to help achieve its strategic goals set for the year 2030.

Since its inception in mid-2017, SAMI has been leading Saudi Arabia's efforts in developing self-sufficient defence capabilities with its fast-growing portfolio of military products and services spanning four business divisions – Aeronautics, Land Systems, Weapons and Missiles and Defence Electronics.

Launched in May 2017, Saudi Arabian Military Industries (SAMI) is a state-owned ‎military industries company working under the directives outlined in the ‎Saudi Vision 2030. Aiming to be among the top 25 military industries companies in the ‎world by 2030, SAMI is expected to play a key role in localising 50% of the Kingdom's ‎total government military spending.

SAMI is combining the latest technologies and the best national talents to develop ‎military products and services at par with international standards across its four business ‎divisions. ‎The company is also focused on increasing exports and bringing foreign investment to ‎the Kingdom's military industries sector.