Investment fund Global Infrastructure Partners (GIP) has outbid its rivals Blackstone and Bill Gates’ wealth management company Cascade Investment with an agreed purchase price of £3.4bn for private jet services company Signature Aviation.
GIP, which owns Edinburgh Airport and was previously the largest shareholder at London’s Gatwick Airport, struck a $3.4 billion deal to buy the company, which runs bases used by private jets around the world. GIP sold London City Airport for about £2 billion five years ago.
Since the takeover interest was made public in December, Signature shares have jumped more than 60 per cent in value with speculation of a counter bid. The company generates more than 85 per cent of its business by providing refuelling, engineering, catering and hangar services at a number of American airports. It also have activities at sites including Heathrow, Luton and Biggin Hill in the UK.
The deal with Global Infrastructure Partners (GIP), which still manages a stake in Gatwick on behalf of investors, offers Signature shareholders $5.50 per share in cash, higher than the $5.17 jointly proposed by Blackstone and Signature’s top shareholder Cascade Investment.
Counter proposal could follow
But a spokesman for Signature added: “Nothing precludes either Blackstone and Cascade or Carlyle from making an offer proposal that the board of Signature Aviation will consider.”
Cascade holds 19 per cent of Signature. Last week, the company agreed to work exclusively with Blackstone on a joint bid. Cascade has added that, if it and Blackstone were to make a firm offer, it would vote against any competing proposals. The companies have until today (January 14) to make a firm offer under UK takeover rules.
While many commercial airline operators are experiencing continued disruption from the COVID-19 pandemic, private jet operators have fared better with wealthy passengers switching to travelling on aircraft with significantly lower passenger numbers.
GIP’s bid needs the support of 75 per cent of Signature shareholders – Cascade’s 19 per cent stake would be a significant hurdle even if GIP was to raise its bid above any fresh offers from Blackstone and Cascade.
Competition for Signature has been ongoing for nearly a year
The competition for Signature, formerly known as BBA Aviation, has been ongoing for nearly a year. Signature rejected an approach from New York-based GIP last month, stating that the price was lower than the one outlined by Blackstone in its sixth proposal. Blackstone announced its first proposal in February last year.
GIP plans to take Signature Aviation off the London Stock Exchange if the deal goes through. Signature’s board is led by industrialist Sir Nigel Rudd whose experience within boardrooms includes Barclays and Boots. He said: “The resilient performance and strong financial position through the pandemic has enabled the Signature directors to consider its future and evaluate this offer from a position of strength,”
Adebayo Ogunlesi, chairman and managing Partner of GIP warned market conditions would “remain subdued for some time” but added the private equity company’s experience in long-term infrastructure investments made it an “ideal partner” for Signature and a “strategically compelling and financially attractive” offer for investors.
Rudd said: “Over recent years, the management of Signature has created a leading global private aviation support services business, whilst streamlining the group to maximise value for shareholders. The resilient performance and strong financial position through the pandemic has enabled the Signature directors to consider its future and evaluate this offer from a position of strength.”