By Chris Milne
Cobham Aviation Services Australia faces new ownership with global private equity company Advent International lobbing a takeover bid for British parent Cobham Plc.
The takeover offer from Advent of 165 UK pence per Cobham Plc share valued the target at about £4bn (A$7.17bn). It was announced on July 25, alongside the company’s financial results for the first half of calendar 2019. Cobham Plc’s board of directors recommended shareholders to vote in favour of the deal, noting the offer price represented an “attractive premium” on the share price of 123 UK pence on 24 July 2019, prior to the takeover being made public.
“The Cobham directors believe that the acquisition recognises the quality of Cobham’s businesses and its prospects,” the company said in a regulatory filing. “The acquisition represents an opportunity for shareholders to realise their investment in Cobham in cash in the near term. As a leading global private equity firm, Advent provides an experienced partner for Cobham’s customers, employees and other stakeholders.”
Advent International Plc managing director Shonnel Malani said: “We strongly believe in the importance and potential of Cobham’s businesses and look forward to bringing our long track record of successful stewardship of companies to ensure that Cobham flourishes under our ownership.”
Cobham said it would undertake a “strategic review” of the Australian operations of its Aviation Services business. This process, of which Advent was aware, would enable the company to decide “how best to optimise the value” of the Australian arm, Cobham Plc chief executive David Lockwood said. Advent supported the review, he added.
Cobham plc said its Aviation Services business in Australia generated revenues of $386 million in calendar 2018, with “organic revenue growth of 10 per cent in the first half of 2019”.
The company’s Australian operations include the Coastwatch contract, worth more than $1 billion over 15 years; the QantasLink Boeing 717 contract, involving 20 aircraft and contracted to 2026 under a $1.2 billion contract; the Australian Maritime Safety Authority’s search and rescue contract, worth $640 million and involving four Bombardier CL-604 jets; and several fly-in/ fly-out (FIFO) contracts with mining groups.
Cobham Australia chief executive Ryan Both told staff on Thursday afternoon the local operation was facing “an exciting new time”, and said the recent arrival of an Embraer 190 for work on Chevron’s North West Shelf petroleum operation and the impending arrival of the first Dash 8 Q400 for FIFO work would help to transform the business. However, he added, the Australian arm would need more capital to drive growth “and realise our full potential”.
The December 2018 edition of ADBR sister publication Australian Aviation included a profile on Cobham’s Australian operations. That story can be read here.