The Wall Street Journal
Executive-jet-service provider BBA Aviation PLC has agreed to buy Landmark Aviation for $2.07 billion in a big bet on a recovery in the U.S. business-jet market.
BBA, the biggest operator of business-jet services facilities in the U.S. under its Signature brand, said Wednesday it will buy the No. 3 competitor in the U.S. from private-equity firm Carlyle Group. The U.S. is by far the world’s largest market for business and private flying.
BBA chief Simon Pryce said that after a period of low single-digit growth for the sector, “there is a slow and steady recovery building after a relatively flat couple of years.” Over the medium to long term, the company expects “accelerated growth.”
As the commercial airlines retrench and serve cities from central hubs, business-jet operators will benefit as they directly link markets not otherwise connected, Mr. Pryce said.
BBA said the acquisition will be funded through new debt facilities and a fully underwritten rights issue of 562,281,811 new ordinary shares at a price of 133 pence a share, raising £748 million ($1.15 billion). The acquisition will also be funded by $1 billion in debt, it said.
Mr. Pryce said the Landmark brand would be replaced over time with Signature’s, though he didn’t expect facilities to be closed. The two share facilities on 12 airports. Signature has 133 so-called fixed-base operations world-wide, of which 79 are in the U.S. Landmark is more U.S.-focused, with 64 of its 68 FBOs located there.
BBA forecasts about $35 million in savings from the combination to be achieved by the end of December 2017 through cutting staff, joint purchasing and the rebranding, BBA Chief Financial Officer Mike Powell said.
“This is a transformational transaction,” Mr. Pryce said.
Despite the combination of two of the world’s largest operators of such facilities, Mr. Pryce said the market remains highly fragmented and that he didn’t expect regulatory hurdles.
Carlyle acquired Landmark Aviation in 2012. This is the second time Carlyle has sold the business after a deal in 2007.
Mr. Pryce said the company would consider additional deals and was keeping an eye on Europe and the Asia-Pacific to potentially add further business-jet servicing stations. “There are smaller markets that we will be looking at for further expansion,” he said.