FTSE 100 engineering firm Babcock is in exclusive talks to establish a joint venture with helicopter services operator Avincis, the two companies confirmed yesterday.
Although no deal value was given, City A.M. understands that it is expected to have an enterprise value of around £1.5bn and an equity value of up to £1bn.
The venture would be in line with Babcock’s strategy to expand both in the UK and overseas, as it looks to tap into more lucrative defence contracts.
JP Morgan is advising Babcock on the potential deal.
“There can be no certainty that these discussions will lead to any transaction or any certainty as to the terms upon which any such transaction might proceed,” said Babcock in a statement yesterday.
Avincis, which is part-owned by private equity giant KKR, provides aviation services for mission-critical operations such as medical emergency, coach and city surveillance, fire fighting and energy support services.
Babcock, which gets just over half its revenue from the Ministry of Defence (MoD), posted a 17 per cent rise in first-half profit earlier this month.
The company has a 27,000-strong workforce and runs the Devonport and Rosyth dockyards.