NOC Northrop Grumman Corp Holding Co

Airbus Group SE on Friday said it had agreed to sell its defense electronics business to an affiliate of KKR & Co. LP for €1.1 billion ($1.24 billion), the latest in a line of deals by private-equity groups targeting commercial and military aerospace products.

The business has annual sales of around €1 billion and makes radars and electronic sensors, but is being shed as part of a broader restructuring by Airbus to concentrate on higher-growth commercial aircraft.

Private-equity groups have refocused attention on the aerospace and defense market in recent months as valuations that had exceeded the S&P 500 average started to moderate.

Airbus said it aimed to close the proposed sale by the first quarter of next year and may retain a minority stake in the business. It still plans to shed additional defense operations with combined sales of around €1 billion euros from a military and space business with revenues last year of €13.1 billion.

The company decided to retain a border-protection business it previously sought to unload. Airbus had hoped to pick the preferred buyer for the defense and security assets held for sale by the start of this year. That turned out to be "too optimistic," Airbus executives said.

Private-equity groups were big buyers of defense assets in the late 1990s and 2000s, particularly of those focused on government information-technology services, many of which were enlarged through acquisitions and later spun off.

KKR was part of an investor group that in 2009 agreed to pay Northrop Grumman Corp. $1.6 billion for its TASC Inc. unit. Engility Holdings Inc. last year completed the purchase of TASC for $1.1 billion. KKR didn't immediately respond to a request for comment on the proposed Airbus deal.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

March 18, 2016 17:25 ET (21:25 GMT)

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