Babcock Lands $2.7B Deal For Avincis
The deal comes about four months after Babcock and Avincis confirmed exclusive joint venture talks. During that time, talks morphed from discussions about Babcock taking a large minority stake and emerging as the largest of the three shareholders, into a full acquisition.
The price breaks down into 920 million pounds for stock and 705 million pounds in assumed debt. Babcock will help fund the purchase by offering five new shares for every 13 at a price of 790 pence to raise 1.1 billion pounds. Babcock shares by early afternoon in London were down 83 pence, or 6.1%, at 1,283 pence.
Avincis supports "mission-critical" operations, including medical emergency, civil protection, search and rescue, coast and city surveillance, firefighting and energy services with clients including governments and other public-sector agencies as well as energy companies. As of Dec. 31, it had 343 aircraft, operating from more than 200 bases. Revenue in 2013 was 582 million euros ($801.5 million) and adjusted Ebitda was 135 million euros, Babcock said.
"The proposed acquisition of Avincis meets Babcock's strategic objectives as it brings into the Babcock Group a market-leading business, delivering mission critical services and complex engineering support to blue-chip customers in multiple geographies. Avincis already has a strong growth platform and its combination with Babcock will generate even greater expansion opportunities and value creation for Babcock's shareholders," said Babcock CEO Peter Rogers in a statement.
Investindustrial has been an Avincis investor since 2005 and sold part of its stake to KKR in 2010. The Italian investor will make a return of 6 times its money on the investment following the sale to Babcock, which is conditional on clearance by Babcock shareholders at an April 16 meeting.
Avincis in the fall of 2012 changed its names from Grupo Inaer SA, and moved its headquarters from Alicante, Spain, to London in an initiative seen as a possible prelude to an initial public offering.
Its other markets include Ireland Italy, France, Portugal, Norway, Chile, Peru and Australia. Babcock said it sees opportunities to expand in Southeast Asia, and also to piggyback on its own operations to enter southern and eastern African markets.
Babcock had revenue of 3.2 billion pounds in the year ended March 2013
Investindustrial senior partner Andrea C. Bonomi noted that Avincis has achieved a double-digit organic revenue growth rate since 2005, aided by nine major acquisitions.
The private equity team working on the disposal also included KKR's Mattia Caprioli, who is head of the firm's services sector team in Europe. Avincis is led by CEO James Drummond.