Who could buy Hawker from Hawker Beechcraft?
publication date: Oct 24, 2012
author/source: Alasdair Whyte
Hawker Beechcraft has announced its intention to sell or close its Hawker business jet line and the company is already busy talking to potential buyers.
Here, in no particular order, are the most likely candidates:
Mahindra & Mahindra
India’s largest auto maker only moved into aerospace in 2007. It already supplies components to Boeing for 737s and Gulfstream for G150s.
In 2009 it acquired Gipps Aero an Australian light utility aircraft maker. Gipps produces a family of aircraft ranging from two seaters to 20 seaters. Mahindra has said it wants to become a global leader in completed aircraft. Rothschild advised it on its bid for Hawker Beechcraft where it was rumoured to be the underbidder.
Pros: It likes a bargain. It could afford to invest in Hawker and it would fit its ambitions. Mahindra bid for Hawker Beechcraft.
Cons: Hawker Beechcraft’s sale advisers were concerned that Mahindra did not put enough effort into the first round. Mahindra likes to manufacturer in cheap countries, Hawker’s unions may not like the deal (although that probably goes for all remaining bidders)
Nextant, which is owned by Directional Capital, has a programme where it re-manufacturers Hawker 400 XP/ Beechjet 400A aircraft. Hawker would give them the intellectual property and tools to do this with other models although it is unlikely to invest in new models or the Hawker 4000.
Pros: Good chance of closing. No political issues for a US buyer. Not to be underestimated.
Cons: Many of Hawker Beechcraft’s management team dislike Nextant. Ken Ricci, the owner of Directional, is not looking to pay much (or even anything).
China Aviation Industry Corporation (AVIC) is an enormous company and the fact that it already has joint ventures with both Embraer and Cessna would not stop it being interested in Hawker. In 2011 AVIC acquired Cirrus Aircraft it likes getting a discount on acquisitions.
The Cirrus merger could also reassure staff and customers. After the announcement there was a campaign to keep stop a Chinese company buying Cirrus (which was actually already largely owned by a Middle Eastern investor).
One year on Cirrus staff seem happy. "We merged with China Aviation Industry General Aircraft, last year because we shared a vision of worldwide growth for general aviation and found a partner that would expedite our aircraft development programs and accelerate global expansion. Our airplanes will continue to be designed and built at facilities in Duluth and Grand Forks, N.D., and allow us to continue our mission to develop and build the best, most exciting aircraft in the world," says Todd Simmons, executive vice president, sales and marketing Cirrus Aircraft.
Any bid for Hawker would be subject to the same political issues as Superior’s bid. However, in a month both the US elections and the Chinese leadership change will be completed.
Pros: AVIC bid in the first round but will be even more interested in buying cheap. AVIC has bought other US companies so knows how to close transactions it could also afford to invest in the Hawker line.
Cons: The same political issues that hampered Superior’s bid. The last thing Hawker Beechcraft’s management team will want to do now is entering into negotiations with another Chinese buyer.
Other Chinese buyers
Speaking after the announcement of Superior’s bid in July, Michael Richter, managing director and co-head of Lazard's aerospace and defence group, a major adviser of aerospace mergers and acquisitions, said it was no surprise. "It was clear that the likely buyer was going to be Chinese," he said. “The country has been building major aerospace capabilities and Hawker Beechcraft is the largest and most significant component."
Although AVIC is the best known Chinese company others may be interested. Aircraft and auto parts company Shanghai listed Xi’an Aircraft International acquired Austrian composite parts maker FACC in 2009. Companies like Hunan Boyun that makes carbon-fibre auto and aircraft parts could also be interested in making carbon-fibre aircraft.
Pros: China wants to build an aircraft industry.
Cons: As with AVIC above. After failure of Superior deal Hawker Beechcraft may be especially wary of less well known Chinese companies.
Few companies understand Hawker as well as BAE Systems. It sold the company to Raytheon in 1993. It had been hoping to merge with EADS, which owns Airbus, but the deal fell through when European governments blocked it.
Hawker would give it a commercial aircraft business of its own.
Pros: BAE already has large US business so few political problems.
Cons: They have already sold it once so we doubt they are even looking at it.
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