Babcock in discussions with helicopter group Avincis

25th Nov 2013 07:08

London-listed engineering services giant Babcock has revealed that it is in discussions about setting up a 'joint venture' with helicopter firm Avincis.The Financial Times cited sources as saying that the Babcock is looking to pay around £400m for a 50% interest in the company before a potential takeover at a later date. Another source told the paper that Babcock could be interested in a "significant minority stake".However, the Sunday Times suggested that it could launch a £1.5bn bid - comprising £1bn in cash plus £500m of net debt - to buy the whole company.Avincis, one of the largest providers of search and rescue helicopters in the world, is currently owned by private-equity groups KKR and Investindustrial. It is thought that Babcock could take a stake alongside one of both of the owners.Babcock said that the establishment of a "joint venture" is in line with its strategy to "grow from its position as the UK's leading engineering support services company in both the UK and overseas"."However, there can be no certainty that these discussions will lead to any transaction or any certainty as to the terms upon which any such transaction might proceed. A further announcement will be made if and when appropriate," Babcock said.Analysts at Jefferies said on Monday that the transaction would not yield material cost synergies for Babcock in contrast to its larger acquisitions in the past."Instead, Avincis (which seems to have strong 10%+ organic revenue growth potential) could accelerate Babcock's internationalisation strategy as it operates in 10 countries and would improve Babcock's range and criticality of service in the offshore oil and gas market."BC