BBA AVIATION yesterday confirmed it was in talks to tie up with American engine repair firm Standard Aero, sending its shares sharply higher.
The group, which offers plane refueling and maintenance services, said it was in preliminary discussions with Standard Aero’s parent firm Dubai Aerospace Enterprise “regarding a potential business combination”.
Shares in BBA Aviation opened six per cent higher but tempered gains to close up one per cent at 310.2p, valuing the FTSE 250-listed firm at around £1.48bn. The shares have increased almost 40 per cent in the last 12 months.
No details were given on the scope or value of the possible deal. JP Morgan and Jefferies act as brokers to BBA, though the firm declined to comment on whether these banks were advising on the talks with Dubai.
“Any major transaction is likely to significantly enhance the market position of BBA’s Aftermarket Services and Systems activities, which currently generate the highest divisional margins for the group,” said Westhouse analyst Kevin Fogarty in a note.
Meanwhile the company announced that it had purchased Maguire Aviation, a ground-handling company based in Van Nuys Airport in Los Angeles, for $69m (£51.6m) in cash.
“Its proximity to downtown Los Angeles makes it a convenient and attractive gateway for both business and leisure travellers, including the Hollywood entertainment industry,” said BBA in a statement.
The deal will beef up BBA’s Signature flight support business, which is headquartered in Florida and provides fuelling, hangar rentals and other facilities at more than 100 airports.
The acquisition is expected to be earnings enhancing in the first full year of ownership and meet BBA Aviation’s target for 12 per cent pre-tax return on invested capital by the third year of the acquisition.
The company hopes the deal will close by the end of 2013.