BBA Aviation acquires GE Aviation Systems’ legacy fuel measurement business

BBA Aviation plc, the leading global aviation support and aftermarket services provider announces today that its Legacy Support business, part of the Aftermarket Services and Systems division has reached agreement to acquire GE Aviation Systems’ legacy fuel measurement business (the “Business”) for a cash consideration of $62.5m on a cash and debt free basis. In addition to the purchase price, BBA Aviation will make a further investment of approximately $7.0m in working capital and fixed assets.

The Business assembles, sells and overhauls fuel gauging and measurement systems to leading defence and commercial airframe OEMs, tier one suppliers and air frame operators. Its products serve a large and growing installed base of over 6,200 active aircraft. Key platforms include A319/320, B777, Eurofighter Typhoon, AW101 and Hawk2. The acquisition enhances Legacy Support’s exposure to the commercial aviation market on large platforms with a significant installed base, high utilisation rates and extended in-service lives. It also expands its non-US product portfolio and adds third generation electronics expertise, an increasingly important legacy market.

The Business generated EBITDA of approximately $9m in 2010 on revenues of c.$43m and as at year end, had gross assets of $8.4m. Approximately half of its revenues are derived from replacement components and repairs and half from OE production, with good order visibility and protected intellectual property. The acquisition is expected to meet BBA Aviation’s 12% ROIC hurdle by year three. However, together with the impact of the planned equity placing, announced separately today, there will be a marginal dilution of earnings.

The Business is currently located in three facilities in the UK, US and Singapore, all of which will be transferred to nearby BBA Aviation sites and will operate under the BBA Aviation Ontic brand following a phased integration process.

The transaction is expected to complete by the end of March, subject to the satisfaction of certain conditions.

Simon Pryce, Group Chief Executive of BBA Aviation, stated:
“This acquisition continues the exciting development of BBA Aviation’s Legacy Support business. It strengthens our position as the provider of OE standard legacy parts into the aftermarket, extends our content on core platforms, gives us critical mass outside the US and enhances our technological expertise in the important and growing area of legacy electronics. The strategic fit of this business within Legacy Support has benefits for customers and employees and is an excellent value creation opportunity for BBA Aviation.”