Last week ten investors presented the first offers to acquire the Basque aeronautical manufacturer ITP Aero. As confirmed by different financial sources to the EconomistAmong them are the US funds Carlyle, KKR, Platinum, Towerbrook in consortium with Onex, the British CVC, the Penrose family office, as well as the Spanish Aciturri, which is looking for a partner to provide the financial lung to undertake the transaction, and the German MTU. The operation, according to the same sources, will amount to more than 1,500 million euros.
At first, the investment bank Goldman Sachs ?? the one in charge of coordinating the sale process ?? raised the possibility of limiting the auction to a specific number of candidates in order to avoid a massive bid that could reduce the interest of potential buyers. The decision of Rolls-Royce, the current owner of ITP, to fatten the company by handing over factories in the United Kingdom (Hucknall and Barnoldswick) has raised the appetite of investors, so they have decided to open the process to more interested parties, pending that the first screening is carried out in the coming weeks. the Economist contacted Rolls-Royce and Goldman Sachs, who declined to comment on this information.
One of the main problems faced by this transaction is the sector in which ITP Aero operates: the aeronautical industry. After being one of the great harmed by the coronavirus and mobility restrictions, experts do not trust a recovery of this business until 2023, which could be extended until 2025 depending on how the pandemic evolves. This complicates the investment of some venture capital funds, which usually participate in the capital of companies for three or five years. However, according to the financial sources consulted, those interested in acquiring the Basque manufacturer set a time horizon of more than seven years in order to meet the objectives of this investment.
The Spanishness of the company
The other big question is the one related to the approval of the Government to the operation. In full uncertainty as to whether it will authorize the Australian IFM takeover of Naturgy, the market questions whether the Executive will impede the entry of a foreign investor into ITP Aero, considered a strategic company due to its strong ties to Defense. For this reason, the possibility that it would end up in the hands of another Spanish company such as Aciturri is defended by some executives in the sector. It should be remembered that in 2019 a first attempt in this regard was already made with Indra, which finally did not come to fruition due to price issues (at that time 51% of the company was valued at 659 million euros).
However, different experts consulted suggest that there should be no veto by the Government, since the Basque company is already in the hands of another foreign investor: the British group Rolls-Royce. In any case, the financial sources consulted indicate that the sale process is progressing slowly and the transaction is not expected to be resolved in the coming weeks. This operation is part of Rolls’ objective of divesting non-strategic assets, which would include the Basque company, announced last summer. The British group wants to sell assets worth 2,000 million pounds (2,317 million euros, at the current exchange rate) given the complicated situation in the sector. At the beginning of last March, Rolls-Royce presented losses of 4,000 million pounds (4,635 million euros) in 2020 due to the impact of the pandemic on its business, compared to 583 million pounds (675 million euros) of benefit recorded the previous year.