(Reuters) – German defense group Rheinmetall <RHMG.DE> and French peer Thales <TCFP.PA> are among several groups interested in a defense electronics business that plane maker Airbus <AIR.PA> is selling in an effort to streamline its operations, sources familiar with the transaction said.

The two companies as well as U.S.-based Raytheon <RTN.N> and a number of private equity groups including Carlyle <CG.O>, Bridgepoint, CVC, KKR <KKR.N>, KPS and Triton are expected to hand in tentative offers for the Airbus business by a Friday deadline, they said.

The price tag on the sale, dubbed “Orlando”, which is led by investment bank Evercore <EVR.N>, may reach up to 1 billion euros ($1.10 billion), the people said.

Airbus, Europe’s largest aerospace group, is currently selling several businesses to focus its defense division on warplanes, missiles, launchers and satellites.

A Rheinmetall spokesman said the company was following the divestment activities of Airbus, declining to comment further.

The other companies and private equity investors all declined to comment.

Europe’s defense industry is struggling as most governments are keeping a lid on military spending and the asset sales are part of efforts announced by Airbus last year to sell half a dozen businesses with combined annual revenues of around 2 billion euros.

The move breaks with the company’s previous efforts to diversify into security activities and halts investment in defense electronics, in which it lacks the scale of rivals.

The business up for sale under the “Orlando” deal makes components for radars, optronics, electronic warfare and border control applications and has about 100 million euros in annual earnings before interest, taxes, depreciation and amortization on 1 billion euros in sales.

The products are used, for example, in surveillance or for equipment that helps pilots to fly in fog or at night.

Acquiring the business would allow Airbus’s European defense peers to boost activities in an important area.

But after looking at the initial information packages on the deal, some potential buyers said they doubted the business’s financial prospects and did not expect it to sell at a high valuation.

Although widely seen as a less likely outcome, defense sources said selling the sensors business to a non-European buyer would deal a further blow to the controversial Euro Hawk reconnaissance drone, which has been in limbo since Germany canceled it in 2013 over high costs.

There have been reports that Berlin might revive the drone, developed by U.S. contractor Northrop Grumman <NOC.N>. But giving up manufacturing control of the drone’s sensors could erode its European content and make other alternatives more attractive.

The will to keep technology and jobs within certain regions, may hand German bidders good chances, as the business is significantly Germany-based, one of the sources said.

But a third person said that any buyer would be sensitive to these matters and the nationality of the bidders did not really say much about qualities as a long-term owner.

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