Dubai investment firm Dubai Aerospace Enterprise (DAE) at press time was in “active discussions” with Washington, D.C.-based private-equity firm Carlyle Group to acquire its Standard Aero company and Landmark Aviation, particularly its maintenance, repair and overhaul (MRO) businesses. According to sources familiar with the process, DAE is expected to pay more than $1.5 billion for the two firms. At press time a definitive agreement was pending, but no timetable was given.
Formed early last year as an investment arm of the Dubai government to “explore aviation investment opportunities around the world” and managed by several former executives of Honeywell, DAE acquired its first MRO business–Europe-based SR Technics, which serves airlines in Europe and Asia–late last year. The Carlyle deal would give Dubai a foothold in business aviation MRO operations in North America, if the transaction makes its way successfully through what could be a daunting U.S. government approval and public relations process.
Landmark comprises the former engine and airframe maintenance firm Garrett Aviation, FBO chain Piedmont Hawthorne and large aircraft completions and refurbishment center Associated Air Center. Since choosing the name in October 2005, Landmark has acquired several formerly independent FBOs. Standard Aero is a Winnipeg, Canada engine MRO that Carlyle acquired at about the same time it purchased the Garrett network.
Because DAE is not interested in Landmark’s FBO business, once the acquisition is completed it will begin trying to sell the FBOs. It wasn’t clear at press time if the FBOs would be sold as a chain or individually, or if the Landmark name would be retained.
Any cross-border acquisition of this magnitude requires approval by various government entities, including the Committee on Foreign Investment in the U.S. (CFIUS), one of the agencies that forced Dubai’s DP World to relinquish its plans to buy several U.S. shipping ports.
DAE officials, however, do not foresee a problem, preferring to liken its Carlyle proposal to the recent CFIUS approval of Dubai International Capital’s purchase of London-based engine components builder Doncasters, which has plants in the U.S.
To help smooth the approval process, DAE officials say they are “committed to doing anything that’s needed to ensure approval” and have already started laying the groundwork. According to these officials, DAE has started contacting a number of administration offices that deal with CFIUS, as well as key Congressional members.
The company seeks a full 90-day review, and company representatives said DAE would agree to an “evergreen provision” in which CFIUS could investigate the acquisition at any point during and after the transaction, and “what’s happening with the ownership, not just upfront, but along the way as well.”