Babcock International Group Plc share price down, acquires Avincis Group in a 1.52-billion-dollar deal

Babcock International Group Plc made an official statement revealing that it has agreed to purchase private equity-owned Avincis Group in a deal estimated to 920 million pounds (1.52 billion dollars), absorbing 705 million pounds of Avincis debt.

Currently, Babcock is trying to expand its reach in helicopter services by acquiring the company that works under the Inaer and Bond brands. Babcock will also get the opportunity to increase its variety of products. According to analysts, the price of the purchase is about 14 time bigger than the 143-million-euro earnings of Babcock for 2013 before interest, tax, depreciation and amortisation.

The two companies announced in November last year that they have started exclusive negotiations. Avincis Group operates in ten countries and offers assistance in medical emergencies, search-and-rescue missions and fire-fighting operations, as well as help to authorities and offshore companies working in the oil and gas industry.

Mr. Peter Rogers, who is the current Chief Executive Officer of Babcock International Group Plc said in the statement, part of which was cited by the Wall Street Journal: “The proposed acquisition of Avincis meets Babcocks strategic objectives as it brings into the Babcock Group a market-leading business, delivering mission critical services and complex engineering support to blue-chip customers in multiple geographies.”

The companys Chief Executive Officer also explained: “Avincis already has a strong growth platform and its combination with Babcock will generate even greater expansion opportunities and value creation for Babcocks shareholders.”

Avincis is being sold by Investindustrial and KKR & Co. LP, which are private equity groups. About 70 million euros were paid by Investindustrial in 2005 for the purchase of Avincis Group. Five years later, the other equity group – KKR & Co. LP – acquired a 49.9% stake in Avincis from Investindustrial.

Babcock International Group Plc fell by 3.81%, or 52.00 pence, to 1 314 pence by 9:37 GMT, marking a one-year change of +21.67%. The company is valued at 4.95 billion pounds. According to the Financial Times, the 14 analysts offering 12-month price targets for Babcock International Group Plc have a median target of GBX 1 490, with a high estimate of GBX 1 835 and a low estimate of GBX 1 200. The median estimate represents a 9.08% increase from the previous close of 1 366 pence.