Babcock Falls after Helicopter Deal

Babcock international was one of the biggest losers in the markets last week after the company announced a hefty acquisition, and made a call for cash to pay for it. Babcock will be paying £920 million, and taking on a further £705 million in debt to acquire Avincis, the helicopter services group.

UNDEFINED - Monday, March 31, 2014

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Avincis specialises in medical, fire fighting and search and rescue services as well as the north sea oil industry. The company has plans to expand to the oil and gas offshore markets in Norway and Australia. Babcock International will be paying for the acquisition with a 5 for 13 rights which have been issued at 790p per share. They hope to raise £1.1 billion before expenses. The news of this issue has caused shares to fall by 51p, to a current level of £13.15.

Babcock Chief Executive Peter Rogers said that he believes the deal is a good one of the company and that in the long term it will benefit shareholders because it takes the company into other non-UK territories, which it expects will become increasingly important over the next few years.

Overall, last week was a rocky one for the FTSE 100. The continued tensions in the Ukraine weighed heavily on the index, and mixed news in other markets, including jobs data from the USA and manufacturing data from China, also proved problematic. However, positive UK retail sales data made a significant contribution to boosting the index, and helped to bring it out of a several days long slump.


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