CVC to acquire Ontic for $1.365bn

Katharine Hidalgo
31 July 2019

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CVC has agreed to acquire aerospace parts manufacturer Ontic from BBA Aviation for $1.365bn.

CVC Fund VII will finance the acquisition. The fund closed on €15.5bn in 2017 and is expected to make around 30 investments of €100m-1bn in companies with enterprise values of €500m-5bn.

Ontic's revenues increased by 3.4% to $216m in 2018, up from $208.8m in 2017. The majority (77.8%) of the its turnover is generated in North America.

Underlying operating profit grew to $59.3m in 2018, up from $55.2m in 2017. Prior to the announcement of the sale, BBA had an EBITDA target of $100m for the end of 2021 for Ontic.

BBA Aviation expects to return between $750-850m to shareholders following the transaction. The business makes up 9.4% of the group's revenue.

The deal has been approved by the BBA board and is subject to shareholder and regulatory approval. It is expected to close in the fourth quarter of 2019.

Previous funding
Ontic was acquired by BBA in 2006 for $67m. Under its ownership, the business pursued an aggressive inorganic growth strategy. In 2018, the company acquired US-based Firstmark Corp, which has a portfolio of licences and employs 70 people at two US locations. The company also completed five separate licence acquisitions that year, including with Honeywell and United Technologies Aerospace Systems.

Company
Ontic supplies OEM-licensed aviation parts and maintenance, repair and overhaul services for the continuing support of maturing and legacy aerospace platforms. It operates in the US, the UK and Singapore, and works with more than 25 OEM partners. Founded in 1974 and based in Cheltenham, the company employs 350 people, according to LinkedIn.

People
CVC Capital Partners – James Mahoney (senior managing director).
BBA Aviation – Mark Johnstone (CEO); David Crook (CFO).

Advisers
Equity – Freshfields Bruckhaus Deringer (legal).
Vendor – Slaughter and May (legal); Jones Day (legal); JP Morgan Cazenove (corporate finance); Lazard (corporate finance).