Signature To Acquire Rival Landmark in Blockbuster Deal

 - September 23, 2015, 10:27 AM
Landmark's 68 FBOs are part of the deal for BBA to acquire the company from affiliates of the Carlyle Group.

In what would be the largest acquisition in the history of the general aviation service industry, not to mention a substantial wager on the continuing resurgence of business aviation, Signature Flight Support parent company BBA Aviation announced on September 23 that it will purchase Landmark Aviation from investment fund manager The Carlyle Group for $2.065 billion. Included in the deal are Landmark’s 68 FBOs in North America and Europe and its MRO business, as well as its aircraft charter and management division, which would give BBA its first involvement in that segment.

The transaction, subject to approval by regulators and company shareholders, would dwarf Landmark’s purchase last year of Ross Aviation and its 19 FBO locations for approximately $375 million. The acquisition would enable customers to benefit from an extension of Signature’s service across a much larger network of locations, according to BBA CEO Simon Pryce, who added that “combining Signature and Landmark Aviation also would realize significant cost synergies as well as substantial tax benefits.”

Signature operates 133 FBOs worldwide, and between the two companies there is currently redundancy at 12 locations, nine of them in the U.S., which would entail official scrutiny of the deal under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act. At Washington Dulles International Airport, the two chains are the only service providers present. It’s the same situation at Fresno Yosemite International Airport and Scottsdale Airport, where Landmark last year was required to divest an FBO as part of its purchase of Ross Aviation. Signature acquired that location and, if the deal is completed, would likely be required by the Department of Justice to shed the Landmark facility. At Jacqueline Cochran Regional Airport in Palm Springs, Calif., Signature and Landmark are the only full-service FBOs, while recent acquisitions at New York Westchester County Airport resulted in each company having two FBO locations at HPN; the only other FBO there is operated by Million Air. Signature already occupies two FBOs at Teterboro; the addition of a third would give the company control of half the service providers at that key Northeast business aviation airport. Other North American locations where there would be duplication include Alaska’s Ted Stevens International Airport; Dallas Love Field and San Antonio International Airport in Texas; and Vancouver International Airport. In Europe, the two companies compete at Paris Le Bourget, where Landmark opened a new FBO complex last year, and at London Luton Airport, which was added to Landmark’s portfolio last year when it purchased the former RSS Jet Centre’s three UK locations.

“With all the hurdles that have to be overcome, it will be a challenge to get this deal done,” cautioned one industry insider, yet even if BBA divested at all 12 locations, the purchase, which could be finalized early next year, would see Signature’s network swell to 189 FBOs worldwide. Atlantic Aviation, its next largest competitor, holds 69 FBOs, all in the U.S. “This is a strategic fit for the Signature network,” noted Signature president and COO Maria Sastre. “It will significantly expand our reach within North America, as well as globally.” If consummated, the transaction is not likely to change the landscape of the FBO industry significantly, in the opinion of FBO industry consultant John Enticknap, a founder of the Aviation Business Strategies Group. “Landmark and Signature were big chains anyway, so Signature just gets bigger.” Enticknap counts approximately 1,600 “viable” FBOs in the U.S. and Canada, categorizing them as those at airports with improved runways 4,000 feet or more in length. Based on those numbers, FBO chains constitute roughly 17 percent of those total locations, concentrated mainly at top-tier general aviation airports. “That doesn’t really change with this merger,” Enticknap told AIN.

Landmark’s Growth Spurt

In addition to the Ross Aviation purchase last year, which fattened its U.S. FBO network by more than 50 percent, Landmark also expanded its managed fleet through a series of corporate purchases. Earlier this year it further elevated that tally with the purchase of international charter and management provider TWC Aviation, which was rebranded with the Landmark name in September. The company now manages 110 business aircraft, trailing only Executive Jet Management, which has some 200 under management.

Yet the disposition of Landmark’s aircraft charter and management division will present an extra consideration for UK-based BBA: U.S. regulations prevent majority foreign ownership of a commercial aircraft operator. “In the period before completion of the deal, preparations are being made in respect of any restructuring of the charter transportation and aircraft management business, which is required to comply with the U.S. Department of Transportation’s U.S. ownership and control requirements,” a BBA spokesperson told AIN.

“Following completion [of the deal], we plan to limit our ownership of the Landmark charter and aircraft management business to a non-controlling stake to address the U.S. DOT U.S. control requirements,” the spokesperson continued. “We will create a wholly owned new entity, which will provide charter brokerage services, which are not subject to U.S. ownership and control requirements, to Landmark’s clients and to other charter operators.”

Carlyle, which would be selling Landmark for a second time, reacquired it from GTCR Golder Rauner and Platform Partners in 2012. While the purchase price was not disclosed, experts estimated its value at approximately $700 million. At the time, GTCR’s leadership said that for Landmark to continue its success, it “required continued access to capital to grow through acquisition and new site development and the current owners had exhausted their resources during the four years of ownership and significant growth.” In the September 23 announcement of the pending BBA purchase, Landmark president and CEO Dan Bucaro thanked the Carlyle Group for its support and added, “We are confident that the success we have achieved at Landmark will carry forward under BBA Aviation’s ownership.”