Cobham acquires FBH
Cobham plc today announced that it has completed the acquisition of the 50% shareholding that it did not already own in FB Heliservices Ltd, FB Leasing Limited and FBS Ltd (together ‘FBH’), from its long standing joint venture partner, Bristow Helicopters Ltd.
The transaction comprises cash consideration of £74 million payable on completion, together with the assumption of Bristow’s share of FBH’s net debt.
Commenting on the acquisition, CEO, Bob Murphy said: “FBH is a business we know extremely well through our long established joint venture arrangement and it has capabilities that are highly complementary to our existing Aviation Services business. It also brings a long track record of operating in attractive, specialist outsourcing markets with demonstrable success in winning contracts across the globe”.
“We also offer our thanks to Bristow at the conclusion of this joint venture partnership, as FBH has successfully served to benefit all its stakeholders, including the UK Ministry of Defence and its other customers globally.”
FBH specialises in defence helicopter training in the UK and elsewhere, including a contract with the Ministry of Defence to train helicopter crews for all branches of the armed forces, as well as the provision of search and rescue, logistics and emergency medical services for government clients globally. Its capabilities are complementary to Cobham’s existing Aviation Services business, which provides services to the fixed wing aircraft market, allowing Cobham to offer a broader service to a wider customer base.
Acquiring full control of FBH strengthens Cobham’s position in a sector that is characterised by long term contracts and which is expected to benefit from a trend towards increased outsourcing of helicopter operations and associated support services. This trend is expected to be driven by the outsourcing of existing in-house operations and by training opportunities arising from the sale of new helicopters into faster growth geographies. Consistent with Cobham’s strategy, FBH has a good pipeline of new business opportunities in a number of these faster growth markets. These opportunities will further build on its existing, geographically diversified operations, strengthening Cobham’s exposure to non US defence/security markets.
In addition, the acquisition combines FBH’s proven helicopter capabilities with Cobham’s long standing position and reputation in its fixed wing Aviation Services business. This will enable the Group to offer customers the convenience of a transport solution that includes a combination of helicopters and fixed wing aircraft in its outsourcing markets. FBH’s existing management team will remain with the company following the acquisition.
As an existing Group joint venture, Cobham has been accounting for FBH by incorporating its 50% share of FBH’s profit after tax within the trading profit line of the Aviation Services Division, which in the year ended 31 December 2012 was £6.7 million. As at 31 December 2012, FBH had gross assets of £98 million. The Group is assuming FBH’s net debt of approximately £38 million at completion, which was principally owed to Cobham, and therefore Cobham’s net debt will increase by the cash consideration of £74 million only.
It is expected that the acquisition will be immediately earnings enhancing and will cover the cost of capital in the first year of ownership. The implied transaction multiple is an estimated 7.4x FBH’s 2012 EBITDA.
