Bain-led consortium enters discussions for Rolls-Royce's ITP unit

Unquote team
05 August 2021

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Rolls-Royce has entered exclusive negotiations with Bain Capital on a takeover of its Spanish subsidiary ITP Aero, the British aerospace firm confirmed in a statement.

Rolls-Royce said there was no certainty an agreement will be reached.

An Expansion report from 4 August (prior to Rolls-Royce issuing a statement) noted that a Bain-led consortium that includes Sener was poised to take over ITP with a EUR 1.6bn bid.

Tilting the balance in favour of the Bain proposal were government officials from the Spanish federal government and the Basque Country, the report noted.

Aciturri, the local partner taking part in the competing Cinven-led consortium, was considered less compelling than Bain's Sener partnership, the Expansion report said. In late July, Mergermarket reported that Cinven had joined forces with aerostructures and aeroengine components specialist Aciturri in the final round of Rolls-Royce's sale of ITP Aero.

The sale has been heavily influenced by political considerations, since Spain's national government has a direct veto on any bids for ITP Aero. The company provides engines for the Spanish armed forces.

In early July, El Economista reported that the Spanish government set several conditions to approve the sale of ITP Aero: 40% of the company's capital must be in Spanish hands, the buyers must not overleverage the company, and they must be able to provide around EUR 600m so that the airline manufacturer can invest in further growth.

Since then, the progress of the process and the various permutations of potential co-bidders have generated constant headlines in the local press.

As of late July, Bain was reportedly yet to join forces with a local player. Mergermarket noted at the time that Bain would have a good chance of winning the auction if it could attract either government-controlled IT company Indra Sistemas or Basque aerospace company Sener (the founder of ITP alongside Rolls-Royce, which exited in 2017) into a consortium. A Sener spokesperson said at the time that the company was not involved in the ITP Aero process.

A few days later, El Confidencial reported that Bain had increased its local allies beyond Sener and Indra to include in its offer two other Spanish shareholders: Basque Country-based steelmaker Sidenor and investment firm JB Capital, which is also advising the PE firm on its investments in Spain.