Carlyle Group To Sell Landmark Aviation to Britain's BBA for More Than $2B

Sep 23 2015 | 5:42pm ET

Global private equity behemoth Carlyle Group will sell its Landmark Aviation unit to Britain’s BBA Aviation for $2.065 billion, a deal widely interpreted to mean the business aviation industry has fully recovered from the financial crisis. 

Pairing the two competitors will result in the largest operator of fixed-base operations for aircraft in the world. BBA’s Signature Flight Support has the highest number of fixed base operations (FBO) in the United States, while Carlye’s Landmark has the third highest. Both companies operate in a highly fragmented industry. . 

"This is the right time to buy this asset, it's the right price and we know the business very well," BBA CEO Simon Pryce said in a media call, describing the deal as sizeable, relatively low risk, and strategically in line with the company’s plan. 

The purchase will add 56 locations to Signature’s 133 FBOs, 70% of which will be in North America, where the country’s slow-but-steady economic growth is pushing a rebound in private business aviation. Last year, 480 small- and medium-sized aircraft were delivered, 12% higher than in 2013 and the first positive annual growth since the financial crisis hit in 2008. 

BBA believes the acquisition will add to 2017 earnings and the return on invested capital to exceed the weighted average cost of capital in 2018. The tie-up is expected to save $35 million annually in costs by 2017, and BBA sees tax benefits of an additional $240 million. Landmark’s annual EBITDA is estimated to be around $170 million, noted Reuters in August.

The deal will be funded via new debt facilities and a fully underwritten rights issue of 562,281,811 shares at an issue price of £1.33 per share, raising $1.15 billion, according to Reuters. News of the rights issue sent BBA stock down as much as 11% on Wednesday in early trading, although it recovered to close nearly unchanged. 

Carlyle has sold Landmark before, selling it in 2007 to state-owned Dubai Aerospace, who then sold it to GTCR and Platform Partners only a year later. Carlyle bought it back in 2012. 

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