The leasing unit of General Electric Co., said in a statement that it reached an agreement over the acquisition of the biggest helicopter leasing company in the world, Milestone Aviation Group, in a deal estimated to $1.78 billion. GE Capital Aviation Services revealed that under the terms of the deal 168 helicopters, which are worth $2.8 billion, are to be added to its portfolio of rental assets.
The acquisition, when finalized, would provide General Electric with access to the market for almost 2 000 large helicopters used for transportation of supplies and workers to distant oil and gas platforms.
Milestone was founded four years ago by Richard Santulli and currently holds a helicopters fleet estimated to about $2.8 billion. It has also placed orders estimated to around $3 billion.
The deal is expected to help Capital Aviation Services of General Electric consolidate its position on the market. As reported by Reuters, the Chief Executive Officer of Capital Aviation, Mr. Keith Sherin, said in a statement: “The addition of Milestone will deepen our domain expertise in aviation and oil and gas, two critical GE industries.”
The Chief Executive officer of General Electric has been trying to reorganize the company in order to make it more oriented towards industrial businesses, while retail financial services are to be left a secondary priority. He said that the earnings contribution from the industrial divisions of the company is planned to be increased from 55% in 2013 to 75% by 2016.
Nicholas Heymann, an analyst at William Blair & Co. commented in a telephone interview for Bloomberg: “GE is steadily narrowing the focus of GE Capital. Gecas, energy financial services, commercial lending and leasing are the cores. And consumer and real estate are being wound down.”
General Electric Co. was 1.32% down to close at $23.95 per share yesterday, marking a one-year drop of 1.84%. The company is valued at $243.52 billion. According to CNN Money, the 12 analysts offering 12-month price forecasts for General Electric Co. have a median target of $29.00, with a high estimate of $32.00 and a low estimate of $27.00. The median estimate represents a +21.09% increase from the last price of $23.95.
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