HAECO Acquisition Of TIMCO All About Growth

Hong Kong Aircraft Engineering Company’s (HAECO) acquisition of TIMCO this week came as something of a surprise, given how quickly the deal seemed to be arranged.

The $388.8m deal will create one of the world’s largest MRO providers based on revenues and customers numbers, as well as the level of services and products offered.

HAECO, which is 75 per cent owned by holding company Swire Pacific, gains wider access to the North American market, and the acquisition expands the company’s narrowbody and regional aircraft service offerings. TIMCO will keep its name and management, and will seek growth opportunities in the expanding Asia-Pacific market, particularly with regard to its interiors engineering and manufacturing business. Indeed, the interiors aspect of the deal would seem to have been a key reason for HAECO’s investment, with the company also stating its desire to accelerate its “development of technical capabilities”.

Augustus Tang, HAECO CEO, said the company had “long been looking to expand” its global presence, with the acquisition enabling it to “unlock exciting growth opportunities for us globally”. In its home market, HAECO has seen less demand for heavy maintenance recently, and its first-half net profit this year reflected this – dropping 21 per cent from the year-before period. The TIMCO deal therefore comes at a good time, and represents HAECO’s first major acquisition outside Asia-Pacific.

TIMCO is currently owned by investment vehicles managed by OwlCreek Asset Management, but has seen three different owners over the past 15 years – in this light then it is less surprising that the company was ripe for acquisition. A “business as usual” mantra is being emphasised to employees with no layoffs expected as a result of the acquisition; instead growth will come by being part of an even larger, more global independent MRO company.

“This transaction will open the door to new growth going forward. By making an investment in TIMCO, HAECO is demonstrating its commitment to strengthening our platform in North America,” said TIMCO CEO Kevin Carter. “This exciting and unique opportunity offers our customers access to a broader and deeper platform of products and services while better enabling us to seize on current global growth opportunities related to interiors engineering and manufacturing.”

The acquisition is expected to be completed in the first quarter of 2014, subject to regulatory approvals, and will be financed through both cash and debt.

Jason Holland, Editor, Aircraft Technology Engineering & Maintenance

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