By Calvin Biesecker
General Dynamics [GD] yesterday said that it has agreed to acquired Switzerland-based Jet Aviation, in a $2.3 billion cash deal that significantly boosts its capabilities as a business jet services provider and gives it a global presence in this market.
In addition, the proposed deal is aimed at giving customers one-stop shopping for all varieties of business jet aircraft, GD said. The company said that in addition to expanding its Aerospace portfolio, the deal adds a premiere brand and experienced management team.
The deal is also about adding a long-term growth driver to GD’s business portfolio. The company has been enjoying a strong run in its defense and its existing business jet manufacturing company, Gulfstream. The company expects that the pending addition of Jet Aviation will give it a strong play in servicing a sharply expanding installed base of business jets around the world.
Citing statistics published by aircraft system and engine supplier Honeywell [HON], GD said the installed base of business jets is expected to double from about 15,000 aircraft this year to 30,000 in 10 years. It is that installed base where Jet Aviation makes its money.
GD’s Aerospace segment, which consists largely of Gulfstream, also includes General Dynamics Aviation Services. GD Aviation Services also provides services for business jets. Gulfstream has six service centers, five in the United States and one in the United Kingdom, to provide support for Gulfstream aircraft. GD Aviation Services has five service centers in the U.S.
Jet Aviation, which is owned by Dreamliner Lux, a company controlled by the private equity firm Permira Funds, has 5,600 employees and operates at nine locations in the U.S. and 16 locations throughout Europe, the Middle East and Asia. There is no geographical overlap between GD Aviation Services’ and Jet Aviation’s service centers.
The deal is expected to close in the fourth quarter of this year. GD expects Jet Aviation to contribute $1.5 billion in sales and $230 million in earnings before interest, taxes, depreciation and amortization in 2009. Jet Aviation expects to have $1.4 billion in sales this year. The company has 5,600 employees.
Services provided by Jet Aviation include maintenance, repair and overhaul, completions and refurbishments, engineering, fixed-base operations, aircraft management, flight support and global executive jet charter services, aircraft sales, acquisitions and personnel services.
New York-based Gleacher Partners LLC, was GD’s financial advisor on the transaction.