BBA Aviation confirms buyout of US rival and rights plan

Aerospace support and aftermarket services provider BBA Aviation announced the acquisition of US rival Landmark Aviation in an ambitious move to grow its footprint in the markets for fixed business operations and business general aviation.

The transaction carried a price tag of $2.1bn (£1.37bn).

A £748m rights issue to fund the deal had been fully underwritten, the London-based company’s management said in a statement.

Commenting on the agreement, BBA chief Simon Pryce highlighted the improved prospects for cash and value generation following the deal “through effective integration, continued strategy execution and active portfolio management.”

It's a transformational and strategically compelling transaction

It was a “transformational and strategically compelling transaction for BBA Aviation,” Pryce added.

The London-based company served a wide range of market segments, including Business and General Aviation (B&GA), Commercial Aviation and Military Aviation.

Reports out overnight on Tuesday had indicated that negotiations were afoot.

US,Houston-based BBA Aviation expected the purchase to add to its earnings per share in 2017 and be materially enhancing on a cash tax basis.

Management also highlighted the prospects for “substantial” cost synergies and tax benefits, alongside “strong cash generation and rapid deleveraging profile”.

Landmark Aviation was owned by private equity firm Carlyle Group LP.

Several suitors, including buyout firms, were among the interested parties, according to “people familiar with the matter” cited by Reuters.

Recent M&A activity in the sector Stateside includes the sale of StandardAero by Dubai Aerospace Enterprise. It was purchased by Veritas Capital Fund Management LLC in July for $2.1bn (£1.37bn).

Shares of Carlyle Group closed 2.34% lower at $19.58 in Nasdaq trading on Tuesday.

Shares of BBA Aviation closed 0.49% lower on 22 September at 284.7p giving it a market capitalisation of £1.349bn.