Babcock buys €2bn Avincis helicopter group as it broadens reach
Babcock International, the UK engineering group whose services include decommissioning Royal Navy submarines, has agreed to buy Avincis, a provider of search and rescue helicopters.
The company, sold by private equity groups Investindustrial and KKR, is valued at about €2bn including debt, Babcock said in a statement on Thursday. Babcock and Avincis said in November they had entered exclusive talks.
The transaction will broaden Babcock’s geographical scope and its range of products. The deal is subject to Babcock’s general meeting approval, scheduled next month.
Avincis, which operates in 10 countries, is one of the world’s largest providers of helicopters for emergency missions, surveillance work and support to facilities such as offshore oil and gas rigs. Babcock’s acquisition price represents about 14 times the company’s 2013 earnings before interest, tax, depreciation and amortisation of about €143m.
Investindustrial, the Italian-based investor that owns a stake in Aston Martin, invested €70m in 2005 to buy Avincis, then a helicopter operator based in Alicante, Spain. It added acquisitions in Italy, France, Australia, Scandinavia and the UK.
KKR bought a 49.9 per cent stake from Investindustrial in 2010 in a deal that valued the company at about €700m including debt. Avincis later moved its headquarters to the UK as its owners considered a London initial public offering among exit options.
Investindustrial is making more than six times its investment in the company, while KKR is more than doubling it, but the price is lower than what the private equity groups were expecting to achieve in an IPO, according to people with knowledge of the talks.
Buyout fund managers typically prefer a clean and entire sale of their stakes than going through the lengthy process of listing portfolio companies, which only allows a partial disposal. But buoyant equity markets have lately made that decision more difficult.
Babcock earns more than half of sales from the UK’s ministry of defence. Its most recent large deal was its £1.4bn takeover of VT Group three years ago, which helped to propel it into the FTSE 100. The company has a market capitalisation of about £4.9bn.