Babcock taps investors for £1.1bn to buy choppers
The engineering giant Babcock International is asking investors for £1.1bn as it pursues the purchase of the helicopter group Avincis – a deal 15 months in the making.
The £920m acquisition is not without controversy, however, as Avincis owns Bond Aviation, which has been hit by a spate of accidents in recent years. In December one of its helicopters, leased to the police, crashed into a Glasgow pub, killing 10 people, while in May 2012 a Bond-operated Super Puma ditched in the North Sea after a gearbox failure.
Babcock’s chief executive, Peter Rogers, said yesterday that the purchase, from the private equity-backed World Helicopters consortium, would cement Babcock’s reputation as one of the City’s hungriest groups for major acquisitions. Most famously, Babcock splashed out £1.3bn on its defence industry competitor VT Group in 2010.
Mr Rogers said: “We’re used to doing large deals. We’ve seen 11 of our top shareholders and they’ve all said that they will vote ‘yes’ for the deal.”
Once debt is included, Avincis will cost Babcock nearly £1.64bn. The helicopter group, whose consortium owners include the Italian fund Investindustrial and US firm Kohlberg Kravis Roberts, flies what are described as “mission-critical services” such as air ambulances and police choppers.
Avincis has a fleet of 356 aircraft, of which 196 are owned by the company, and about 3,000 employees operating in 10 countries from Norway to Australia.
Shares in the FTSE 100 company fell nearly 7 per cent, or 91p, to 1,275p after the rights issue – offering five new shares at 790p a piece for every 13 – was unveiled.
Babcock’s advisers on the cash call will pick up fees totalling £45m. The bulk of these will go to lead underwriters JP Morgan Cazenove, Jefferies, Barclays and HSBC.
Babcock owns the Rosyth dockyard, on the Firth of Forth near Edinburgh, where the Royal Navy’s aircraft carriers are assembled.
As part of its rights issue prospectus, Babcock also outlined the risks of Scots voting for independence come September. “If Scotland becomes independent, there is likely to be a lengthy period of uncertainty in respect of the new Scottish government’s policies and their impact (some of which can be adverse) on the Babcock group’s ... Scottish businesses,” the company said.
“There may also be a medium-term knock-on effect on the nature, timing and scope of the policies and procurement plans of the successor British state, especially in defence terms.”
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