Jet Repair Unit Stake Being Sold
MONTREAL (AP) — Air Canada parent Ace Aviation Holdings Inc. is selling a 70 percent stake in its aircraft maintenance, repair and overhaul subsidiary for $639 million to a group that includes KKR Private Equity Investors.
The deal, also involving investment firm Sageview Capital LLC, values the entire ACTS LP unit at $912 million.
Ace will retain a 30 percent stake in the business, and said Air Canada will remain its largest customer.
Other ACTS customers include Canada’s Defence Department, Air Transat, JetBlue Airways Corp., US Airways Group Inc. and UAL Corp.’s United Airlines.
It has maintenance centers in Montreal, Toronto, Winnipeg and Vancouver as well as El Salvador, and has a work force of 4,800.
“This transaction is an important step in ACE’s strategy of unlocking the value in all of our businesses,” said Robert Milton, the holding company’s chairman and CEO.
Maintaining a minority share in ACTS furthers Ace’s strategy of generating additional value for shareholders by developing the maintenance subsidiary as a stand-alone business, he added.
Milton said KKR and Sageview “have a track record of helping businesses that were once part of large conglomerates to become bigger, stronger and more competitive as independent organizations.”
KKR and Sageview’s other Canadian investments have included Shoppers Drug Mart and Yellow Pages Group.
“This investment brings us closer to our goal of establishing ACTS as the leading independent aircraft maintenance provider in the Americas,” said Chahram Bolouri, chief executive of ACTS.
Since Canada is a mature market for the airline maintenance business, the company will have to leverage its capabilities and expand internationally to capture a larger share of the $16.8 billion market in North and South America, he added.
KKR is one of the world’s oldest private equity firms specializing in management buyouts. Sageview Capital LLC is a private investment fund founded in 2006 by Edward Gilhuly and Scott Stuart, both formerly KKR partners.
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