General Dynamics Corp, maker of the Gulfstream private jet, agreed to buy Jet Aviation Management AG from Permira Advisers LLP for 2.45 billion Swiss francs ($2.23 billion) to expand in support services for business aircraft.
The acquisition of Zurich-based Jet Aviation from UK buyout firm Permira should be completed by the end of the year and will immediately add to earnings, Falls Church, Virginia-based General Dynamics said in a statement today.
Buying Jet Aviation will expand General Dynamics into global flight support for the corporate aviation industry. The Swiss company is a world leader in that market, providing maintenance and refurbishment for planes and ground facilities for passengers and flight crew at business terminals. Permira may have earned almost four times its original investment from today’s sale, figures released by its biggest investor show.
“It’s a matter of extending the product offering into the aftermarket,” said Nick Cunningham, an aerospace analyst at Evolution Securities in London. “Looking forward, the value in the business jet industry is going to be in services, because the fleets are getting bigger.”
General Dynamics, which is also the biggest maker of armoured vehicles for the US military and the Navy’s second- largest shipbuilder, has advanced 3.7 per cent since the start of the year, the second-best performance on the 11-member Standard and Poor’s 500 Aerospace & Defence Index, boosting the company’s market value to $36.6 billion.
Jet Aviation was founded in 1967 and employs almost 5,600 people at 25 airport bases, General Dynamics said.
‘Rapidly Growing’: “Through General Dynamics’ acquisition of this strong and rapidly growing organisation, we will expand our participation in the business-aviation industry well beyond that of our current operations,” Chief Executive Officer Nicholas Chabraja said in the statement.
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Sales of business aircraft at Gulfstream jumped 10 per cent to $1.33 billion in the second quarter, the company said July 23. The division is benefitting as a weaker dollar boosts sales to Russia, China, India and Brazil. Gulfstream’s overseas orders last year surpassed US bookings for the first time and the unit contributed 18 per cent of group sales.
Permira, based in London, bought Jet in 2005 for an undisclosed sum from its Swiss family owners, expanding the company by acquiring Midcoast Aviation the following year.
Jet is also adding maintenance depots in Russia and China to tap growing usage of business planes there. The Swiss company helped outfit Russian billionaire Roman Abramovich’s Boeing Co 767 in 2004, according to a report in the Moscow Times.
Investor Windfall: SVG Capital Plc, a London-based investment trust and Permira’s No 1 investor, said in a statement it reaped £84.2 million from the sale. The investment originally cost £22 million, SVG’s website shows. SVG referred phone calls to Permira; officials at Permira declined to comment.
Private-equity firms are targeting industrial buyers as the credit crunch makes it harder to finance takeovers and declining stock markets make initial public offerings less attractive alternatives for selling holdings. Announced private-equity deals have dropped 71 per cent so far this year, according to data compiled by Bloomberg.
Permira investments include Freescale Semiconductor Inc, German broadcaster ProSiebenSat 1 and British bingo- hall operator Gala Coral. The firm, started in 1985, is investing an ¤11.1 billion leveraged buyout fund.