European private equity firm Cinven has acquired aerospace manufacturer Avio SpA from The Carlyle Group and Finmeccanica for EUR 2.57 billion, significantly surpassing the EUR 1.5-1.6 billion paid by Carlyle and Finmeccanica in September 2003 when they bought the aerospace arm of FiatAvio SpA. Carlyle owned 70% of the company, with Finmeccanica owning the remaining 30%… but Cinven’s release notes Finmeccanica’s “reinvestment” in the company so this may simply be an investment group shuffle.
The transaction is expected to close in October 2006 and is subject to the approval of the relevant competition authorities. So, who is Avio, for those who don’t know?
* Avio’s most high-profile business designs, manufactures and services subsystems and components for military (Eurofighter Typhoon and F-35 Joint Strike Fighter) and commercial (the 787’s GenX with GE, A380’s Trent 900 with Rolls Royce, et. al.) jet engines. Their name may not be front and center on the engines themselves, but they’re a key Tier 1 partner to General Electric, Rolls Royce and Pratt & Whitney.
* Avio’s Space Business Unit produces propulsion systems for space launch vehicles like Ariane and Vega light launcher, along with missile applications.
* The company’s two other divisions provide jet derivative engines and automation systems for naval and industrial application and civil engine maintenance, repair and overhaul services.
Avio is present in Italy and abroad in 16 locations and has over 4,800 employees. In 2006, the Company is forecasting sales of EUR 1.4 billion euros and an EBITDA of EUR 275 million.
The acquisition will be funded through a combination of equity from Cinven and Finmeccanica and debt provided by Banca Intesa, Citigroup, JP Morgan, Lehman Brothers, The Royal Bank of Scotland, and Unicredit.
Cinven was advised by Banca Intesa, Citigroup, Rothschild and Unicredit, while Bonelli Erede Pappalardo, Freshfields Bruckhaus Deringer and Gianni Origoni Grippo & Partners acted as legal advisors.
Carlyle invested in Avio through its European and US buyout funds, Carlyle Europe Partners II (CEP II) and Carlyle Partners III (CP III). This is the third sale from the CEP II portfolio. Financial advisers on the transaction for The Carlyle Group and Finmeccanica were JP Morgan, Lehman Brothers and Mediobanca. Legal advisers were Chiomenti, Gitti-Pavesi-Verzoni, Latham & Watkins and Pedersoli.
Additional Readings & Sources
* Cinven (Aug 8/06) – Cinven reaches an agreement to acquire Avio. Joint release with Avio SpA.
* The Carlyle Group (Aug 7/06) – The Carlyle Group and Finmeccanica Agree to Sell Avio to Cinven for EUR 2.57 billion. Joint release with Avio SpA.
* The Carlyle Group – Case study: Avio SpA