THEON agrees €300m deal to acquire infrared specialist HGH
THEON International, the Euronext Amsterdam-listed night vision and thermal imaging group, has signed an exclusivity agreement with private equity firm Carlyle for the acquisition of SAS Stéropès, the holding company of HGH Systèmes Infrarouges, at an enterprise value of approximately €300 million. The deal, financed via a BNP Paribas bridge facility with no equity raise planned, is expected to close by Q4 2026 subject to regulatory approvals and the completion of a statutory French works council process.
HGH, founded in 1982 and headquartered in France with a headcount of more than 130, designs and manufactures electro-optical and infrared systems for defence and civil applications. The company reported revenues of around €40 million, an EBITDA margin exceeding 40%, and a revenue compound annual growth rate of approximately 30% since 2023. Its order backlog at the time of signing stood at roughly €70 million. THEON is paying a mid- to high-teens EV/EBITDA multiple pre-synergies, falling to approximately 10 times post the full impact of run-rate synergies by years two to three.
The deal
THEON says the acquisition is expected to be EBITDA margin accretive and mid-single-digit EPS accretive in 2027. A key attraction is HGH's ITAR-free technology status: its AI-enabled detection and classification systems do not fall under US International Traffic in Arms Regulations, giving customers in non-US-aligned export markets access to advanced capabilities without the licensing friction that ITAR-controlled hardware entails. THEON intends to use France as an export hub and AI research and development centre, building on HGH's existing software capabilities, which include its SPYNEL panoramic infrared surveillance range and the Cyclope threat-classification platform.
Christian Hadjiminas, founder and chief executive of THEON, described HGH as "a European pioneer, with a unique offering of high-performance systems with embedded AI capabilities," adding that the group aims to build "a new European defence electro-optics champion by integrating man-portable and platform-based systems into an interconnected ecosystem."
Market context
The acquisition fits a broader pattern of European consolidation in the defence electro-optics sector, accelerated by elevated NATO spending commitments and the structural demand created by counter-unmanned aerial systems (C-UAS) requirements. THEON has been assembling a platform of complementary businesses: the earlier purchase of Kappa Optronics added airborne gimbals, an investment in ShockEOS preceded the selection of THEON's PHYLAX gimbal by German defence prime Rheinmetall, and a joint venture with Safran targets UAS electro-optics. HGH adds long-range ground-based surveillance and AI-driven threat classification to that stack.
European defence budgets have risen sharply since 2022, with several NATO member states committing to sustained spending above 2% of GDP. C-UAS, in particular, has become one of the fastest-growing sub-segments within the broader defence electronics market, driven by the proliferation of low-cost commercial drones as battlefield weapons. This dynamic favours vendors with mature AI-based detection pipelines, which HGH's proprietary software represents.
Regulatory and standards considerations
The transaction requires standard merger-control clearances, though neither THEON nor HGH disclosed which jurisdictions are in scope. Given HGH's French base and its defence-customer relationships, the deal may attract scrutiny under France's foreign investment screening regime (known as the R151-3 procedure), even though THEON is a European-listed company. Carlyle's exit also closes a chapter on PE ownership of a French sovereign-capability asset, which can be a politically sensitive point in Paris.
The completion of the CSE consultation process is a mandatory precondition under French labour law before a share purchase agreement can be executed, adding a degree of timeline uncertainty. THEON will publish its Q2 2026 trading update on 27 July, which is likely to include further commentary on deal progress and integration planning.