Aviation, Aerospace & Airports M&A Quarterly · 2017-07-07 · 4 Aviation, Aerospace & Airports M&A Quarterly Q2 2014 Q2 2014 Highlighted Transactions Announced Date Target Company

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In this edition:

• Aerospace Pivots to Commercial and Global Growth

• Airlines Join Forces

• Strategics and Private Equity Vie for Aerospace and Aviation Assets

A newsletter published by ICF SH&E in association with Mergermarket

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Aviation, Aerospace & Airports M&A Quarterly Q2 2014

In this edition:

• Aviation M&A driven by new technology

• Notable Aerospace activity fuelled by commercial aircraft interiors

• Airports saw increased competitiveness in the airport retail sector

A newsletter published by ICF International in association with Mergermarket

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ICF SH&E, one of the world’s largest and oldest aviation consultancies, is now doing business as ICF International. ICF’s aviation practice provides strategic and transaction advisory services to clients across the spectrum of air transport.

Contents

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03 Introduction

04 Q2 2014 Highlighted Transactions

07 Aviation Highlighted Transactions and Trends

10 Aerospace Highlighted Transactions and Trends

12 Airport Highlighted Transactions and Trends

Contents

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Introduction

Introduction

ICF International (formerly ICF SH&E) is pleased to present the fourth edition of Aviation, Aerospace & Airports M&A Quarterly published in association with Mergermarket. The publication highlights activity and trends in aviation, aerospace and airport M&A in Q2 2014.

• Aviation deal activity covers airlines, air freight, leasing, business and general aviation, operators, and aviation IT and service providers, such as those involved in handling or catering.

• Aerospace deal activity includes commercial and defense-related firms such as original equipment manufacturers (OEMs), aerospace suppliers, and maintenance repair and overhaul providers (MROs).

• Airport deal activity includes financing transactions where airports obtain funding for facility upgrades and infrastructure maintenance.

Q2 2014 saw the continuation of a highly active investment environment across all three sectors. The aggregate dollar value of transactions rose by 25% in aviation, 316% in aerospace, and 82% in airports. By value, aerospace transactions accounted for 58% of the total activity.

In aviation, demand for advanced technology and equipment drove transactions in the second quarter, similar to the experience in Q1 2014. Many companies in this segment are looking at new software to enhance operational efficiency or improve commercial performance. Areas of activity include maintenance management solutions, communications infrastructure, and aircraft carbon emissions.

In aerospace, the significant increase in Q2 2014 transaction value can be attributed to several large-cap deals in the segment, including the sale of England’s Firth Rixson in a US$2.9bn private equity exit. Acquisitions of aircraft interior companies also drove activity in the aerospace sector.

In airports, M&A in the second quarter was driven by financings of airports and related assets, much as in Q1 2014. There was also significant deal activity related to airport retail as the sector continues to benefit from strong demand and more sophisticated merchandising strategies.

This fourth edition of Aviation, Aerospace & Airports M&A Quarterly delves into the dealmaking activity during the quarter by examining notable transactions, highlighting the key deal drivers and identifying evolving and new trends.

Volume354617

Value US$m5,329

13,2224,318

Aviation Aerospace Airport

Q2 2014 Aviation, Aerospace, and Airport M&A Activity

Q1 2014 Aviation, Aerospace, and Airport M&A Activity

Volume404913

Value US$m4,2703,1782,376

4


Q2 2014 Highlighted Transactions

Announced Date

Target Company Bidder Company Deal Value US$(m)

4/6/2014 Aerlift Leasing Jet Limited Unidentified US Firm 1,461

6/25/2014 Alitalia SpA Etihad Airways 744

6/4/2014 UTair Aviacompany OAO NPF Surgutneftegas 436

5/12/2014 Engine Lease Finance Corporation Mitsubishi UFJ Lease & Finance Company Limited 392

4/8/2014 Grupo Gestair Nazca Capital, SGECR, S.A. 85

5/9/2014 GTL LOT Uslugi Lotniskowe LS Airport Services SP z oo (former LOT Services Sp z oo)

55

4/24/2014 Skytanking USA, Inc. Aircraft Service International Group 17

4/8/2014 Sabreliner Corporation Innovative Capital Holdings, LLC

4/8/2014 Mercator Warburg Pincus LLC

4/23/2014 Ross Aviation, LLC Landmark Aviation, LLC

5/11/2014 Astral Hainan Airlines Co Ltd

5/12/2014 Beacon Intermodal Leasing LLC Mitsubishi UFJ Lease & Finance Company Limited

5/11/2014 London Executive Aviation Limited (70% Stake) Luxaviation Group

5/23/2014 ETS Aviation Ltd. The Boeing Company

5/27/2014 AerData B.V. The Boeing Company

6/24/2014 Baptist LifeFlight Air Methods Corporation

6/26/2014 Thales Software India Pvt Ltd L&T Technology Services

6/27/2014 Ventura Solutions, Inc. The Boeing Company

Q2 2014 Highlighted Aviation Transactions

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Announced Date


6/26/2014 Firth Rixson Limited Alcoa Inc. 2,850

5/19/2014 AVIC Shenyang Aircraft Corporation Sichuan Chengfei Integration Technology Corp Ltd 1,272

5/19/2014 Chengdu Aircraft Industry Group Sichuan Chengfei Integration Technology Corp Ltd 1,145

5/15/2014 Custom Sensors & Technologies The Carlyle Group; PAI Partners 900

5/20/2014 Wencor Group, LLC Warburg Pincus LLC 800

6/2/2014 EMTEQ, Inc.; Fischer+Entwicklungen GmbH & Co. KG B/E Aerospace, Inc. 470

5/6/2014 Piaggio Aero Industries S.p.A. Mubadala Development Company PJSC 252

5/6/2014 Manoir Aerospace SAS Lisi Group 227

6/26/2014 Evektor Aspirasi Pertiwi SDN BHD 200

6/6/2014 Greenpoint Technologies, Inc. Zodiac Aerospace SA 150

5/19/2014 Jiangxi Hongdu Technology Co., Ltd. Sichuan Chengfei Integration Technology Corp Ltd 125

6/5/2014 PATS Aircraft Systems Moelis Capital Partners LLC 115

4/11/2014 SPX Precision Components, LLC RFE Investment Partners; 24/6 Capital Partners 62

4/28/2014 Tianjin Zhongtian Aviation Tianjin Tianbao Infrastructure Co. Ltd 60

4/3/2014 Jianqxi Deli Helicopter Industrial Co Ltd K4A S.r.l. 29

4/1/2014 Ruecker Aerospace GmbH Groupe SII 23

6/3/2014 Dynamet Technology Inc. RTI International Metals, Inc. 16

5/6/2014 ICE Corporation Ultra Electronics Holdings Plc 9

5/19/2014 Mistral Engines SA Guangdong Elecpro Electric Appliance Holding Co Ltd 7

4/1/2014 Norbert Industries, Inc. MB Aerospace Holdings Limited

4/2/2014 McCann Aerospace Machining Corporation Liberty Hall Capital Partners, L.P.

4/10/2014 XTRA Aerospace, Inc. Wencor Group, LLC

4/14/2014 Titan Aerospace Holdings, Inc. Google Inc.

4/30/2014 Kellstrom Defense Aerospace, Inc. Merex Incorporated

5/1/2014 Blades Technology Ltd. (51% Stake) Pratt & Whitney Canada Corp.

5/2/2014 TUG Technologies Corporation E-Z-GO

5/24/2014 Aerotech Peissenberg GmbH & Co. KG Apollo Capital Partners GmbH

5/30/2014 Sanders Industries, Inc. Industrial Growth Partners IV, L.P.

6/10/2014 Apollo Aerospace Group Park-Ohio's Supply Technologies LLC

6/13/2014 Hanard Machine, Inc. Allegheny Technologies Incorporated

6/16/2014 Quest Aviation Supply, Inc Heico Corporation

Q2 2014 Highlighted Aerospace Transactions

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Announced Date


6/4/2014 The Nuance Group AG Dufry Group 1,729

4/26/2014 Cusco International Airport Corporacion America Sudamericana SA and Andino Investment Holding S.A.

538

4/4/2014 Mactan Cebu International Airport GMR Group AND Megawide Construction Corporation

326

5/27/2014 Park'N Fly (Toronto, Montreal, Edmonton and Ottawa business)

Splendid Grand Limited 320

4/30/2014 Istanbul Sabiha Gokcen International Airport Investment Development and Operation Inc

Malaysia Airports Holdings Berhad 287

5/29/2014 CTC-ARI (Airports) Ltd. (50% Stake) Aer Rianta International Group 73

4/2/2014 Lucebit GmbH and its subsidiary, ERNI AGL AG ADB Airfield Solutions, LLC 28

4/24/2014 Liverpool Airport Limited (65% Stake) Peel Holdings (Management) Limited

5/8/2014 MFMA Development SDN.BHD Malaysia Airports Holdings Berhad and Mitsui Fudosan Co Ltd

6/11/2014 Norwich International Airport Regional & City Airports Management Limited

Q2 2014 Highlighted Airport Transactions

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Aviation Highlighted Transactions and Trends

Strategics Flying HighStrategic investors, including Boeing, were active during the second quarter of 2014. Boeing continued its acquisition streak with three purchases that expand the manufacturer’s capability to sell technical services.

First, Boeing agreed to buy UK-based ETS Aviation, a solutions provider that helps airlines monitor fuel consumption and track carbon emissions. Although the firm’s services only cover 600 or so commercial aircraft today, that already amounts to almost 1 million flights and demonstrates potential to expand across the Boeing customer base.

Second, Boeing acquired the Netherlands-based software company, AerData Group from AerCap, Development Bank of Japan, Mitsubishi Corporation, and TES Holdings Ltd. The company provides software solutions to airlines and leasing companies for lease and records management, and engine fleet planning. Third, Boeing acquired Maryland-based Ventura Solutions, a hardware and software engineering firm that focuses on signal processing issues of special value to the intelligence

community. This acquisition adds to Boeing’s Network and Space Systems business that offers custom solutions for government customers.

In another aviation technology deal in Q2, engineering company Larsen & Toubro’s unit L&T Technology Services purchased a 74% stake in Thales Software India, a subsidiary of France-based aerospace firm Thales Group. Through this acquisition, L&T will manage the newly formed joint venture’s management control, operations, and delivery of services. While retaining a 26% equity stake, Thales will assist L&T in its efforts to develop its core business in the avionics industry. The deal also allows Thales to use this new joint venture as a way to implement its offset programs in India and shows Thales’ commitment to strengthening the firm’s industrial foothold in the country.

Private Equity in FlightPrivate equity firm Warburg Pincus announced two major transactions in Q2 2014 involving aviation and aerospace. In the aviation sector, the firm made its first foray into the

Aviation M&A activity in Q2 2014 included a number of transactions involving technology-enabled platforms aimed at improving efficiency and monitoring aircraft carbon emissions. Technology-related aviation transactions by both strategic buyers and private equity firms continued in the second quarter, following a trend from the first quarter. In this quarter, Abu Dhabi-based Etihad Airways also gained Alitalia as a significant new member in its sprawling global network of equity alliances.

Aviation Technology Deals


“Boeing continued its acquisition streak with three purchases that expand the manufacturer’s capability to sell technical services; these deals include agreeing to buy UK-based ETS Aviation, acquiring AerData Group from AerCap, and acquiring Ventura Solutions.”

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Middle East and acquired Mercator, the technology arm of the Emirates Group, from Dnata. By some measures, Mercator is the fourth largest IT provider specializing in airlines. The Emirates Group subsidiary will retain a minority stake in Mercator.

Mercator will continue to focus on its core portfolio of airline and travel industry solutions, such as revenue accounting, while seeking to expand into new adjacent markets like shipping and safety.

The company also suggested the prospect for bolt-on acquisitions to further strengthen its technology platform.

A Major Addition to Etihad’s Equity AllianceAfter lengthy negotiations, Etihad Airways announced a major investment in Alitalia, the Italian national airline. Despite several restructurings in the past decade, this transaction involves a new investment of €1.8bn (US$2.4bn) to restructure the carrier again. Etihad has said it will implement a new strategic plan with new long-haul routes from Rome and Milan, will revitalize the brand, and will expand Alitalia’s focus on Italian tourism and trade promotion.

Etihad’s investment of €560m (US$744m) will come through a combination of equity injections, asset purchases, and other financing facilities and funding arrangements to restructure the airline’s balance sheet. This is to be complemented by a further equity investment of €300m (US$399m) from existing core Alitalia shareholders. Additionally, select financial institutions and existing bank shareholders will provide up to €598m (US$794m) in financial restructuring of short- and medium-term debt €300m (US$399m) of new loan facilities from Italian financial institutions.

Etihad will take a 49% shareholding in Alitalia, for an investment of €387.5m (US$515m). Its total investment also includes €112.5m (US$149m) to acquire a 75% interest in Alitalia Loyalty Spa, which operates MilleMiglia, the airline’s frequent flier program, and the purchase by Etihad of five pairs of slots at London’s Heathrow Airport valued at €60m (US$80m). The slot pairs will reportedly be leased back to Alitalia on an arm’s length basis.

Alitalia has been looking for a savior since Air France-KLM, which had a 25% stake in the Italian airline, opted out of a capital raise for the beleaguered carrier last October.

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Etihad said in early June that it would invest in Alitalia only if the Italian carrier meets a list of conditions. These include job cuts and restructuring, moves opposed by Italy’s biggest union CGIL. Additionally, the deal still has to pass regulatory hurdles, including European Commission agreement that the deal does not constitute unlawful state aid, and assurance that the transaction will not threaten Alitalia’s status as a European airline.

This deal is Etihad’s latest addition to a long line of equity stake purchases (see chart), and, arguably, its boldest given the scale and complexity of the restructuring that lies ahead. Aside from Alitalia, Etihad’s largest stake so far, as measured by percentage ownership, is in Serbia’s Jat Airways, where the Middle Eastern carrier also holds a 49% stake. Etihad recently increased its stakes in Aer Lingus to 4.1% from 2.9% and Virgin Australia to 21.2% from 19.9%.

In June, Etihad denied that it was in talks to acquire an equity investment in Malaysia Airlines. Etihad also kept its stake in Air Berlin at 29.2% despite reports in March that it was going to increase it to 49.9%. Etihad may have refrained from taking a greater ownership stake in the German carrier since its equity acquisitions, including Alitalia, have recently been scrutinized closely by European regulators. For example, Switzerland’s Federal Office of Civil Aviation said that Etihad’s planned purchase of a third of Darwin Airlines does not abide by European Union ownership requirements. The Swiss gave Darwin until September 30 to change the agreement for another review.

Key Takeaways• A pursuit of better operating efficiency via new

technology continues to drive M&A activity in commercial aviation

• Boeing made three acquisitions in the technology space, strengthening its solutions suite and broadening its offering into new areas including maintenance record management

• Warburg Pincus acquired a majority stake in Dubai-based Mercator in its first major push into the Middle East

• Etihad’s acquisitive streak continues with a bold move to expand its equity alliance via a major investment in Italy’s troubled national carrier, Alitalia

Date Airline Stake

June 2014 Alitalia 49%

May 2014 Virgin Australia 21.2%

March 2014 Aer Lingus 4.1%

November 2013 Darwin Airlines 33.3%

April 2013 Jet Airways 24%

August 2013 Jat Airways 49%

January 2012 Air Seychelles 40%

December 2011 Air Berlin 29.2%

Etihad’s Equity Stakes (2011-2014)

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Aerospace Highlighted Transactions and Trends

B/E Aerospace acquired two aerospace firms for a combined amount of US$470m. In transactions that show current opportunities in the aerospace interiors space, the Florida-based company acquired US-based Emteq, which offers aircraft lighting systems, cabin management and power systems, and Fischer + Entwicklungen, a German maker of seating products for helicopters. Emteq’s acquisition will help B/E offer an integrated array of products to its clients in the commercial airline and business jet sectors. The Fischer acquisition is in line with B/E’s longstanding desire to establish a helicopter franchise. B/E stated the two companies had a combined revenue of roughly US$150m and that the deals would add to its future earnings.

After postponing its annual shareholder meeting in May, B/E also announced plans to split into two companies. This move is an alternative to auctioning assets as a response to pressure from activist shareholder Relational Investors and as part of the company’s efforts to explore several strategic options. The supplier of aircraft cabin products will be divided into two independent, publicly traded firms that have their own management team and boards. One will focus on aircraft interiors while the other on distribution.

Also during the second quarter, Zodiac Aerospace acquired Greenpoint Technologies, which caters to ultra high-net-worth individuals who want to upgrade the interiors of their private aircraft. The deal will enable Greenpoint to tap Zodiac’s resources, expand globally into new markets, and fund new projects. Zodiac brings to the table its cabin certification skills and design and manufacturing expertise. Greenpoint, which also operates

In the aerospace segment, Q2 2014 saw notable activity in commercial aircraft interiors. Following the global financial crisis, many airlines and private aviation operators postponed cabin retrofit programs and slowed delivery of new aircraft. As the industry has rebounded, demand for retrofit and new interior services has returned. For many carriers, recent investments in cabin interiors are part of an effort to catch up from delayed investments, but also a drive to harmonize fleets following airline mergers, and to take advantage of new technology such as slimline seats that support more commercial revenue with less weight.

Aircraft Interior M&A


a subsidiary in Denton, Texas, serves as a completion center for Boeing Business Jets.

In a private equity deal, Moelis Capital Partners bought PATS Aircraft Systems for an undisclosed amount. Delaware-based PATS provides various types of aircraft services, components and integrated systems to OEMs and aerospace suppliers, with a focus on narrowbody commercial airframes. DeCrane Aerospace was the original owner of the company, which had sold off the business as a separate firm under Wayzata Investment Partners’ majority ownership. PATS and its subsidiary Hollingsead International offer auxiliary fuel and other integrated systems as well as specialty components. PATS is also a Boeing Business Jets licensed service center, and has capability on other aircraft.

Major Aerospace DealsThere were other notable aerospace transactions in the second quarter of 2014, including Wencor Group’s acquisition of Xtra Aerospace. Xtra is a US – and European – authorized repair station specializing in electrical and mechanical systems used in aircraft currently in production. The purchase boosts Wencor Group’s electrical repair capabilities as it specializes in electrical components across the cockpit and interior of commercial aircraft space. This merger will allow Xtra to leverage Wencor Group’s authority to make and sell aftermarket parts (parts manufacturer approval or PMA) and other repairs (designated engineering representative or DER), which together can cut costs for airline and MRO customers.

Wencor Group, in turn, was acquired by Warburg Pincus in a US$800m buyout. The private equity firm

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said in May that it had entered into an agreement to acquire the Utah-based aerospace company from Odyssey Investment Partners, which had acquired Wencor in 2010. Wencor designs, repairs and distributes aftermarket aerospace components for commercial, military and general aviation.

In another private equity transaction, Alcoa purchased England’s Firth Rixson in a US$2.9bn private equity exit by Oak Hill Capital Partners. Oak Hill had purchased the company in 2007 for US$2bn.

The deal, which strengthens Alcoa’s presence in the jet-engine market, comprises US$2.4bn in cash and US$500m in common stock. The agreement includes an added US$150m in potential earnouts contingent on Firth’s performance through the year 2020. This deal expands Alcoa’s production capabilities, previously focused on aluminum, to different metals and increases

Key Takeaways• The aircraft interior space saw deals driven by

the growth in new aircraft deliveries and strong retrofit demand

• In two transactions that show current opportunities in the aircraft interiors space, B/E Aerospace bought US-based Emteq and Germany’s Fischer + Entwicklungen. B/E, for its part, announced plans to split its interiors and distribution businesses

• Alcoa purchased Firth Rixson in a US$2.9bn private equity exit by Oak Hill Capital Partners, considerably strengthening Alcoa’s presence in the growing jet-engine market

• Warburg Pincus acquires Wencor Group in a US$800m buyout

Alcoa’s 2013 pro forma aerospace revenue by 20% to US$4.8bn. Meanwhile, Alcoa expects Firth Rixson’s sales to increase at twice the rate of the global aerospace market through 2019.

For its part, Firth has gained market share in a successive generation of jet-engine platforms via its considerable investment in isothermal forging. These parts are increasingly employed in jet engines that use elevated turbine temperatures to maximize power output, increase fuel efficiency, and limit emissions. Alcoa expects that the demand for large isothermal aerospace engine disks will triple over the coming eight years as aerospace build rates rise. This deal also allows Alcoa to take advantage of the strong growth in commercial aerospace, with Alcoa anticipating a compounded yearly global commercial jet market growth rate of 7% through 2019.

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Airport Highlighted Transactions and Trends

Peru’s Andino Investment Holding and Argentina’s Corporaciòn America, which form the Kuntur Wasi consortium, have been awarded Cusco’s Chinchero International Airport concession. These companies won the deal after competing with two other groups in a bidding process headed by Peru-based private investment promotion agency ProInversión. In 2010, the Kuntur Wasi consortium was awarded airport concessions in Peru’s six other southern regions: Apurimac, Ayacucho, Puno, Madre de Dios, Arequipa and Tacna. The Chinchero airport will have an area of roughly 430 thousand square feet and will take the place of the Alejandro Velasco Astete air terminal, which currently serves domestic and some international travelers headed to Cusco and Machu Picchu.

In Canada, a joint venture led by Cheung Kong Infrastructure (CKI) agreed to acquire the assets and related land holdings of Park ’N Fly for US$320m. Park ’N Fly offers off-airport car parking in Toronto, Montreal, Edmonton and Ottawa. It also has an off-airport car park business in Vancouver via a joint venture and licenses its brand name to the Halifax International Airport Authority for the utilization of HIAA’s off-airport

car park. The CKI joint venture will first acquire Park ‘N Fly’s operations in Toronto, Montreal, Edmonton and Ottawa, as well as the license agreement with HIAA. After the signing of the purchase agreement, discussions regarding the joint venture’s purchase of the Vancouver business will begin, which the parties say they are hoping to close at the same time as the other airports.

While Bangalore-based GMR Group, which is considering an IPO, exited its 40% stake in Istanbul’s Sabiha Gokcen International Airport last December, some observers wondered whether GMR would continue to play overseas. The question was settled in April when GMR, together with its consortium partner Philippine-based Megawide Construction Corp., beat out six other bidders for a US$326m concession contract to operate the Mactan-Cebu International Airport. This is GMR’s first successful overseas airport bid in nearly four years. The project, which has a 25-year span, had been delayed since an opposing consortium alleged a conflict of interest when the bids were opened in December 2013. For now, Cebu is the only non-Indian airport in GMR’s portfolio, which is anchored by Delhi and Hyderabad airports. GMR exited the Maldives’s Ibrahim Nasir International Airport in November 2012 after the Maldives government ended its concession agreement.

Key Airport Deals


Airport Transactions (Q1 & Q2 2014)

Date Airport Investor Transaction Type

March 2014 CEB GMR-Megawide 30-year concession

May 2014 Chinchero International Airport Corporaciòn America 40-year concession

May 2014 Multi CKI Airport Parking Concession n/a

June 2014 Kansai International Airport (KIX)/Itami Airport (ITM) Pending 40-45-year concession

June 2014 Toronto City Centre Airport Pending 40-year concession

April 2014 Arturo Merino Benitez Airport (SCL) Pending 25-year concession

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Several new airport transactions are in the early stages of development. After years of tentative airport development, the Japanese government launched two transactions in the second quarter of 2014. The tender for sale of government shares in the New Kansai Airport Corporation, which includes Kansai (KIX) and Itami (ITM) airports, has begun. In addition, the tender process opened for Sendai Airport, a smaller airport in northern Japan. The Japanese government has prepared a roadshow for European and US operators, and international consortiums have begun to form with significant interest, especially in New Kansai. If successful, these transactions could be the start of a number of other airport transactions in Japan. Both transactions will likely be finalized before March 2015.

In Chile, the Ministry of Public Works has opened the tender for Santiago’s Arturo Merino Benitez (SCL) Airport. As part of this transaction, the government will be looking for the operator to construct a new international terminal and operate the airport landside areas.

Finally, Porter Airlines Holdings, parent company of Porter Airlines, is looking to sell its rights to operate Billy Bishop Toronto City Airport, where Porter is based. In this unusual situation, the Porter Airlines developed the terminal and single-handedly created its market. After managing the terminal until now, Porter is looking to monetize its position and discontinue as airport operator. A number of bidders are eying this transaction closely. Other transactions are anticipated later this year in France with the sale of regional French airports and in Jamaica.

Airport Retail and M&ADuring the second quarter of 2014, global investments continued in specialized airport operating companies

as well as airport retail, seeking to capitalize on increases in traveler spending, specifically from China.

Malaysia Airports Holdings has been working to convert some of the land around Kuala Lumpur’s main airport and develop the area into a tourist attraction by building theme parks, concert halls, and other draws. In line with this plan, the Malaysian airport operator announced a deal with Mitsui Fudosan Co., Japan’s biggest developer, to open a factory outlet venture in spring 2015. The project, to be called Mitsui Outlet Park Klia, will include 140 outlet stores on roughly 269 thousand square feet of retail space. It is also part of the 70-30 joint venture between the two companies established in 2012 to build a retail center that spans 506 thousand square feet worth RM335m (US$103m).

Malaysia has invested significantly in its airport infrastructure to tap into rising Asian demand for air travel. In May, it opened the US$1.3bn Klia2 terminal, the world’s largest purpose-built terminal dedicated to low-cost carriers. Arrivals this year, however, have been adversely affected by the disappearance of Malaysia Airlines flight 370 from Kuala Lumpur to Beijing in March. The loss of Malaysia Airlines flight 17, while flying over Ukraine, has further strained the country’s aviation ecosystem.

Another notable deal is airport and retail management firm Aer Rianta International Group’s acquisition of the remaining 50% stake in concessions at the two biggest airports in Cyprus, Larnaca International and Paphos. The purchase, from CTC-ARI Airports for €54m (US$73m) from Ermes Department Stores, includes a concession to operate shops at the airports through 2031. The retail space operator reportedly generated sales of €88 million (US$118m) in 2013. Aer Rianta, a unit of Dublin Airport Authority, has conditionally said it would pay for the

“Malaysia has invested significantly in its airport infrastructure to tap into rising Asian demand for air travel; however, arrivals this year have been affected by the loss of two aircraft.”

14 Airport Highlighted Transactions and Trends

added shares from its accumulated profits. The investment will protect and strengthen the overall value of the Dublin Authority’s overseas assets. Officials say this is a sizeable investment for Aer Rianta in a market it views as high priority and that it will boost margins as well as operating efficiencies.

Switzerland-based Dufry, the operator of duty-free stores and airport retailers, was also involved in an airport concession deal last quarter, when it acquired Nuance Group for US$1.7bn. Upon the deal’s completion, the airport retail operator will have businesses in 63 countries and 239 airports and a 15% share of the global airport retail business. The merger is complementary, since Dufry is strong in the Americas while Nuance is big in Europe, especially the Mediterranean, which remains the world’s largest travel destination.

Key Takeaways• Increased competitiveness in the airport retail sector,

particularly in Europe and Asia has resulted in a move towards consolidation

• Airports are looking to diversify revenue sources, as witnessed by Malaysia Airports Holdings’ and Mitsui Fudosan Co.’s intent to build Mitsui Outlet Park Klia, a shopping center around Kuala Lumpur’s main airport

• Key global investments in airports by specialized airport operating companies continues, as demonstrated by GMR Group’s and Megawide Construction Corp.’s successful airport bid, and the initiation of bid tenders in Japan, Chile and Canada for specific airport assets


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About ICF International

About ICF International ICF SH&E, the oldest consultancy dedicated solely

to serving the air transport industry, is now doing business as ICF International. Our aviation and aerospace professionals have been drawn from financial, commercial, and technical segments of the industry, from airlines and from the businesses that serve airlines, such as lessors; maintenance, repair, and overhaul companies (MROs); aircraft manufacturers; and distribution companies.

ICF’s transaction advisory practice provides expert financial, strategic and operational advice to corporate clients, investment banks, private equity firms, sovereign wealth funds and other institutional investors.

Contact: David B. Mitchell Head of Transaction Advisory - Aviation & AerospaceICF International, 630 Third Avenue, 11th Floor, New York, NY 10017 [email protected] | +1 212 656 9151

ICF International has more than 70 locations worldwide, including offices in:

ICF International is a leading policy, management, and technology consulting firm with a staff of 4,500 and offices worldwide. ICF provides our aviation practice invaluable expertise in the fields of digital and interactive technology, business resiliency and emergency preparedness, energy efficiency, environmental sustainability, and strategic communications and marketing.

For more information, please visit us at www.icfi.com/aviation

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Transaction AdvisoryAviation & Aerospace

Rexnord acquired Micro PrecisionRexnord was advised by ICF SH&E

Cinven invested in AvolonCinven was advised by ICF SH&E

Kidd & Company acquired ImagineticsKidd & Company was advised by ICF SH&E

Goldner Hawn Johnson & Morrisonrecapitalized Universal Turbine Parts

GHJM was advised by ICF SH&E

Blue Point Capital acquired SelmetBlue Point was advised by ICF SH&E

Kidd & Company acquired NUMETKidd & Company was advised by ICF SH&E

Istithmar invested in SpiceJetIstithmar was advised by ICF SH&E

Hawaiian emerged from Ch. 11 providing100% recovery to unsecured creditors

Trustee was advised by ICF SH&E

Caribbean Airlines acquired Air JamaicaICF SH&E advised the IFC

LDC acquired AIM GroupLDC was advised by ICF SH&E

DAE acquired StandardAeroDAE was advised by ICF SH&E

Inflexion acquired CTC Aviation GroupInflexion was advised by ICF SH&E

IS Private Equity & HSBC acquired HavasIS PE & HSBC were advised by ICF SH&E

Bravia Capital Partners & HNA Groupacquired Allco Aviation

Bravia was advised by ICF SH&E

Sciens Capital invested inApollo Aviation Group

Sciens Capital was advised by ICF SH&E

The IFC provided equity financing to Kenya Airways

The IFC was advised by ICF SH&E

The IFC provided debt financing to TAM


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Aviation, Aerospace & Airports M&A Quarterly · 2017-07-07 · 4 Aviation, Aerospace & Airports M&A Quarterly Q2 2014 Q2 2014 Highlighted Transactions Announced Date Target Company