Less than a year after bolting on smaller rival Firstmark, parent company BBA Aviation announced July 30 that it will sell component OEM and MRO provider Ontic to private equity investor CVC Capital Partners for $1.365 billion.
BBA said the move will help it focus on its global FBO operator Signature Flight Support.
“BBA shareholders will continue to benefit from Signature’s ability to outperform the business and general aviation market through the cycle, as well as Signature’s ability to take advantage of its significant opportunities for future growth,” the company said in a prepared statement. “We remain committed to delivering long-term sustainable value from Signature, a strongly free cash generative business, which after funding investment requirements, should underpin both progressive dividends and ongoing returns of capital to shareholders.”
Ontic’s portfolio includes a variety of mechanical and electro-mechanical parts, seat belts, drive motors, fuel probes and such. The brand distinguishes itself by taking over production when an OEM decides that a particular product is no longer core to its business. Last October, it closed on its acquisition of Firstmark, building out both the product portfolio and footprint by adding locations in Long Island and North Carolina, to Ontic’s earlier sites in the UK, California and Singapore.
Technically, BBA will sell Ontic to the CVC Fund Vll, subject to BBA shareholder approval and regulatory consents. The deal is designed on a cash-free, debt-free basis. The deal’s multiple was “meaningfully above” BBA’s own trading multiple of 11.4x underlying pretax earnings for fiscal 2018, according to the seller.
BBA bought Ontic in February 2006 for $67 million and grew through acquisition of licenses, organic and inorganic growth, and a disciplined approach to investment, BBA said. It now supports more than 39,000 legacy aircraft, through its portfolio of more than 165 licenses for more than 7,000 parts and more than 1,200 customers worldwide.
The sale should close in the fourth quarter, according to BBA. It is expected to return to be between $750-850 million to shareholders.