Babcock agrees 1.63bn pound deal for helicopter group Avincis

27th Mar 2014 07:09

- Will pay 920m pounds- Will assume 705m pounds of debt- Deal to be earnings accretive in first full yearAfter long negotiations that became public in November, engineering group Babcock has finally agreed to acquire helicopter services provider Avincis for 920m pounds.The FTSE 100 company, which will also assume Avincis' net debt of £705m through a new debt facility of its own, will fund the purchase with a £1.1bn rights issue and will need to put the acquisition to shareholders at a general meeting.Chief Executive Peter Rogers said: "The proposed acquisition of Avincis meets Babcock's strategic objectives as it brings into the Babcock Group a market-leading business, delivering mission-critical services and complex engineering support to blue-chip customers in multiple geographies. "Avincis already has a strong growth platform and its combination with Babcock will generate even greater expansion opportunities and value creation for Babcock's shareholders."Babcock says the addition of Avincis, which had a December order book of €2.3bn, was expected to improve earnings in Babcock's first full financial year following the acquisition and by its second year will achieve a return on invested capital in excess of the current Babcock cost of capital.The fully underwritten rights issue of new shares will be made at a price of 790p per share on the basis of five new shares for every 13 existing shares. Avincis is currently owned by World Helicopters, a portfolio company of US private equity outfit Kohlberg Kravis Roberts & Co.OH