Babcock International Group PLC Acquires Avincis Groupand

Posted: 27th March 2014 08:43

Babcock International Group PLC ("Babcock"), the UK's leading engineering support services company, announces that it has entered into a conditional agreement to acquire the entire issued share capital of Avincis for £920 million (€1,100 million) from World Helicopters S.à r.l. (a portfolio company of investment funds affiliated with Investindustrial and Kohlberg Kravis Roberts & Co.) (the "Acquisition"). Under the terms of the Acquisition, the Babcock Group will also assume Avincis's net debt of £705 million. The Acquisition will be funded through a fully underwritten rights issue of 5 New Ordinary Shares at 790 pence each for every 13 Existing Ordinary Shares, raising approximately £1,100 million, before expenses (the "Rights Issue").
Avincis is a leading provider of helicopter and fixed wing services in mission critical operations such as medical, search and rescue, fire-fighting and civil protection in Europe and a leading supplier of critical offshore crew-change helicopter services to the oil and gas industry in the UK sector of the North Sea, with a clear ambition to expand its operations in the growing Norwegian and Australian offshore oil and gas markets.
The Directors of Babcock (the "Directors") believe that the Acquisition will create a strong platform for future growth and enhance value for shareholders, employees and customers, for the following reasons:

 - Avincis is a clear strategic fit with Babcock;
 - Avincis is well-positioned for growth in its markets;
 - the combination of Babcock and Avincis will create a medium term revenue synergy opportunity;
 - Avincis has high revenue visibility with an order book of approximately €2.3 billion, as at 31 December 2013;
 - Avincis diversifies Babcock's customer base and geographies; and
 - the Acquisition is expected to be earnings accretive in Babcock's first full financial year following the Acquisition and will achieve a return on invested capital in excess of the current Babcock cost of capital from Babcock's second full financial year following the Acquisition.1
As a result of its size, the Acquisition constitutes a Class 1 transaction under the Listing Rules and is therefore conditional, among other things, upon the approval of Babcock Shareholders at the General Meeting.
A combined Class 1 circular and prospectus (the "Prospectus") containing further details of the Acquisition and the Rights Issue and containing the notice convening the General Meeting (to be held at 10.30 a.m. on 16 April 2014) will be sent to Babcock Shareholders (other than Babcock Shareholders with a registered address in the United States or the Excluded Territories) as soon as practicable.
Peter Rogers, Chief Executive of Babcock, said:
"The proposed acquisition of Avincis meets Babcock's 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. Avincis already has a strong growth platform and its combination with Babcock will generate even greater expansion opportunities and value creation for Babcock's shareholders."
James Drummond, Chief Executive of Avincis, said:
"Babcock is a great strategic and cultural fit for Avincis. We provide vital, complex and life-saving services for our customers, and both share a commitment to operational excellence and the highest standards of safety. Avincis's global business has grown significantly over the past few years, and joining forces with Babcock will allow the strengthened group to access new markets and customers, and build on an already impressive order intake."
A presentation for analysts and institutional investors will be held today at Holborn Bars, 138-142 Holborn, 2nd Floor, London, EC1N 2NQ at 8.30 a.m. For further details please call Catherine Hanou (FTI Consulting) on +44 (0) 20 3727 1340. The presentation for analysts will be available on Babcock's website:
J.P. Morgan Cazenove is acting as Sole Financial Adviser in connection with the Acquisition and the Rights Issue and Sole Sponsor in connection with the Rights Issue. Jefferies International Limited and J.P. Morgan Cazenove are acting as Global Co-ordinators in connection with the Rights Issue. Jefferies International Limited, J.P. Morgan Cazenove, Barclays Bank PLC and HSBC Bank plc are acting as Joint Bookrunners in connection with the Rights Issue. Rothschild is acting as Independent Financing Adviser in connection with the Rights Issue and Acquisition finance.
This preceding summary should be read in conjunction with the full text of the following announcement and its appendices, together with the Prospectus which is expected to be published today.

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