DAE to sell part of its US unit for $436m

(DENNIS B MALLARI)  

Dubai Aerospace Enterprise (DAE) is to sell off Landmark Aviation’s airport services segment for $436 million (Dh1.6 billion) to two US private equity funds, the global aerospace manufacturing and services company said Monday.

It is expected the deal will be closed by the first quarter of next year, the company said. The $15bn (Dh55bn) DAE bought aviation service providers Standard Aero and Landmark Aviation from The Carlyle Group in August this year for $1.9bn (Dh6.9bn).

DAE then merged the companies as a business enterprise within its DAE engineering subsidiary.

While DAE executives were not available for comments yesterday, a source close to the deal said Landmark’s sale to US firms GTCR Golder Rauner and Encore FBO was not a “distress sale” like that of DP World’s sale of US port assets.

“It is not a forced sale on grounds of US national security. And while DAE is keeping the maintenance, repair and overhaul (MRO) part of the business, it is selling the fixed-base operator (FBO) part of Landmark Aviation’s business to the two US firms,” the source told  Business 24|7.

The public disclosure statement provided by DAE to Business 24|7 said: “On November 22, DAE Aviation Holdings, through Piedmont Hawthorne Aviation, Piedmont/Hawthorne Canada, Corporate Jets, MRO Acquisition, Piedmont/Hawthorne Canada Holdings, and Piedmont/ Hawthorne Canada Investment Company, each of which is an indirect wholly owned subsidiary of the company, entered into a purchase agreement to sell the airport services segment of the business of Landmark Aviation for $436m.

“This is subject to adjustment as provided in the purchase agreement to Landmark FBO, Landmark Corporate Jets and Landmark Aviation FBO Canada, each of which is an affiliate of GTCR Golder Rauner II. The transaction is likely to close in the first quarter of 2008.”

Earlier, Bob Johnson, DAE’s CEO (pictured above), said the deal with The Carlyle Group would not run into any risks with the US Government. “We’ve been transparent and compliant to the needs of the US Government authorities,” he said.

The two United States companies jointly entered into a definitive agreement to acquire the fixed base operator business, including the related charter, aircraft sales and maintenance parts assets of Landmark Aviation from DAE. Two US private equity funds are paying $436m to take over Landmark Aviation, which is one of the leading US operators of service bases for users of private jets.

While GTCR Golder Rauner is a leading private equity firm, Encore FBO is a portfolio company of Houston-based Platform Partners, operating a growing FBO network in the US and Western Europe.

“The Landmark and Encore assets will complement one another and enhance the value of both networks,” said Dan Bucaro, CEO of the combined entity.