23rd Sep 2015 06:33
LONDON (Alliance News) - Aircraft services company BBA Aviation PLC on Wednesday confirmed it has agreed a USD2.07 billion deal to acquire US rival Landmark Aviation and will launch a big rights issue of shares to fund the deal.
The FTSE 250-listed group said the deal will be funded by existing debt facilities and by raising around GBP748.0 million via a fully-underwritten rights issue, which will see it issue 562.3 million shares at 133.0 pence per share. BBA shares closed at 284.7 pence on Tuesday, meaning the rights issues comes at a significant discount to its current share price.
BBA said the deal will be transformational for its business, increasing its Signature fixed-base operator unit's network to 133 locations in North America and 189 locations overall. The deal also will materially increase BBA's exposure to the business and general aviation segment of the market, a key growth area in the aviation services sector.
BBA expects the deal to be earnings enhancing by 2017 and said its return on invested capital should exceed the weighted average cost of capital on the deal by 2018. It expects the deal to result in around USD35 million in annual cost synergies, which will be delivered by 2017, as well as a USD240 million tax benefit, resulting from new treatment of Landmark's intangible assets.
"This is a transformational step in the continued execution of BBA Aviation's strategy that is both strategically and financially compelling. It represents a unique opportunity to materially expand our global Signature FBO business and deepen our exposure to the attractive B&GA market with its structural growth drivers," said Simon Pryce, BBA's chief executive.
"More broadly, the acquisition increases BBA Aviation's focus on the provision of value-added services to B&GA users and enhances the group's prospects for cash generation and value creation through effective integration, continued strategy execution and active portfolio management," Pryce added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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