BBA Aviation's share price down as it sets out deal to buy Carlyle Group's Landmark Aviation for more than $2bn (£1.3bn).

 
Catherine Neilan
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It's a "transformational and strategically compelling transaction for BBA Aviation" (Source: Getty)

BBA Aviation's share price was down in mid-morning trading on the back of news that it could buy out private equity-owned Landmark Aviation for more than $2bn (£1.3bn).

The British aircraft services provider confirmed this morning that it was making a $2.065bn offer for the Carlyle Group-owned business, which will be partly funded through a £748m rights issue.

It was a "transformational and strategically compelling transaction for BBA Aviation," the company said, which would enable a "major expansion" of its Signature network.

There would be "substantial cost synergies and tax benefits," the company added, with enhanced earnings per share forecast as early as 2017 and return on capital expected to exceed the costs by 2018.

Chief executive Simon Pryce said: "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.

"The acquisition would enable customers to benefit from an extension of Signature's industry-leading service offering and its operational excellence across a much larger network of high quality locations.
"Combining Signature and Landmark would also realise significant cost synergies as well as substantial tax benefits.
"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."
However investors were unconvinced: BBA's share price was down 2.3 per cent at pixel time.