BBA Aviation proposes to buy Landmark Aviation for $2.07 billion

Wed Sep 23, 2015 5:40am EDT
 
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By Aashika Jain

(Reuters) - British aircraft services company BBA Aviation Plc (BBA.L: Quote) said it proposed to buy U.S. competitor Landmark Aviation [LNDAV.UL] for $2.065 billion, a deal that would make the combined entity the biggest fixed-base operator in the world.

The proposed deal would merge BBA Aviation's Signature Flight Support business, which has the highest number of fixed base operations (FBO) in the United States, with Landmark's, which has the third highest, in a market that continues to remain highly fragmented.

"This is the right time to buy this asset, it's the right price and we know the business very well," Chief Executive Simon Pryce said in a media call, terming the acquisition sizeable and relatively low risk.

Landmark Aviation, which is owned by private equity firm Carlyle Group LP (CG.O: Quote), has been exploring a sale as the corporate jet market is slowly recovering from a downturn sparked by the global financial crisis, helping valuations for companies offering services in the industry.

"We remain concerned about the outlook for the business aviation market, and BBA is significantly increasing its exposure to it with this deal," Liberum analysts said in a note.

Pryce, however, shrugged away concerns over tardy growth and said the slow and steady recovery after a few relatively flat years, coupled with a long-term outlook for accelerated growth, looked exciting.

Shares in the company fell to a more than two-year low, ranking among the top percentage losers on the FTSE-250 Midcap Index .FTMC on Wednesday.

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A general view of the lobby outside of the Carlyle Group offices in Washington, May 3, 2012.  REUTERS/Jonathan Ernst