Fiat sells aerospace businesses for 1.5 billion Euros

The Carlyle Group and Finmeccanica have signed a 1.5 billion Euro agreement to acquire the aerospace businesses of FiatAvio SpA from Fiat Group.

The Carlyle Group and Finmeccanica have signed an agreement for the acquisition from Fiat Group of the aerospace businesses of FiatAvio SpA, a supplier to the aircraft engine industry and a leader in space propulsion.

A newly created company, Avio Holding SpA will carry out the acquisition. The new company will be 70% owned by The Carlyle Group and 30% by Finmeccanica. Avio Holding will purchase the entire share capital of Avio SpA, to which all aerospace businesses of FiatAvio have been transferred with effect from July 1, 2003.

The total value of the acquired businesses is approximately 1.5 billion Euros, which, according to a statement, will be funded through a combination of debt financing and equity from The Carlyle Group and Finmeccanica. The acquisition is expected to be completed by the end of 2003 and is subject to the approval of antitrust authorities.

Finmeccanica, as an industrial partner in the deal, will assume a board seat and voting rights in accordance with corporate governance, and will be involved in defining Avio’s corporate strategy and managerial decisions.

‘We are delighted to add Avio to our portfolio. The combined capabilities of Carlyle’s European buyout team along with the deep aerospace expertise of both The Carlyle Group and Finmeccanica have enabled us to conclude an agreement to acquire a business with great potential,’ said Peter Clare, managing director of The Carlyle Group.

‘Avio has outstanding technology, a very strong management team and excellent customer relationships. We will support management’s plan to further grow the business,’ added Clare.

The FiatAvio businesses acquired include the design, development and production of components of aeronautical engines, accessory gearboxes, low-pressure turbines, naval and space propulsion systems as well as the maintenance, repair and overhaul activities for military and commercial aircraft engines.

FiatAvio has 14 manufacturing plants, 9 research centres and over 5,000 employees. In 2002, the company reported sales of 1,534 million Euros and an operating profit of 210 million Euros.