Global Infrastructure Partners has pulled off the bidding equivalent of a barrel roll attack by putting Signature Aviation, which runs the world’s largest fixed-base operator network, firmly back in its crosshairs with a revised $4.63 billion bid for the company.
Signature’s board has accepted GIP’s cash offer of $5.50 per share. Sir Nigel Rudd, the firm’s chair, said: “The [company’s] 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”.
GIP’s offer – from its $22 billion flagship fourth infrastructure fund – was its second, with an initial bid rejected at the close of last year. It came shortly after Blackstone, which has been bidding for Signature since last February, announced on Friday that it had partnered with Cascade Investments – Bill Gates’ wealth manager and Signature’s largest shareholder – in its bid for the private aviation services company. Blackstone is offering $5.17 per share, valuing the company at $4.3 billion. It is bidding for the company through its open-end infrastructure and long-life core private equity funds.
Sources familiar with the transaction pointed out on Friday that the Cascade partnership had considerably strengthened Blackstone’s hand. In a prior regulatory filing, Cascade pledged “not to work with any other possible offer or with respect to a joint offer for [Signature] or an offer whereby Cascade would receive any form of equity consideration”, as well as “to vote against any competing proposal”.
The Carlyle Group has also approached Signature and has until 4 February to announce whether it wants to put in a firm bid for it. The Blackstone/Cascade consortium has until 14 January to announce a firm bid. GIP’s offer is set to be voted on in March.
All the firms involved in the bidding declined to comment or could not be reached for comment.
Allure of private aviation
As we wrote last week, private aviation has fared better than commercial aviation during the pandemic. According to data provider FlightAware, at the end of last year, business flights – which it classifies as all non-commercial or cargo flights – had been operating at between 85 percent and 90 percent of their 2019 volume since July 2020.
Sources that have looked at aviation services companies have found much to like – from their infra-like performance to their strong market position, with limited competition. Said one: “What makes an airport infrastructure? Nobody is building a lot more airports to compete with you. You could say the same thing about [airport] services companies. There’s a limited amount of real estate, and if you have a lease on that real estate, who’s competing with you? I think that’s what brings it back to being infra-like for investors.”
On its website, Signature boasts about its “long-term, quality real estate assets [with] average remaining lease life of 17 years across Signature’s FBO portfolio in North America”.
Aviation services firms generate cashflows from aircraft maintenance, hangars and fuel supply, among other things, the source said: “If you look at [their] history, they do have a pretty good performance, like infrastructure. But it’s not contractual, which is what [infrastructure investors] prefer.”
The source also said aviation services is a “very fragmented industry [with] lots of different players” and, as such, is ripe for consolidation. That view seems to be shared by GIP. In its statement, the GP said it “sees an attractive opportunity for Signature […] both through organic growth and targeted, bolt-on acquisitions”.
Signature Aviation is the top service provider for business and general aviation customers – everything from full-service flight support to ground handling to managing hangars and terminals. Although it is global, most of its operations are in the US, the world’s leading B&GA market. The firm changed its name from BBA Aviation last year and has counted Bill Gates as a shareholder since 2009.
Jordan Stutts contributed to this report