M&A wind lifts aviation sector

New Delhi: The aviation sector is seeing rapid consolidation, with the emphasis shifting from private equity to mergers and acquisitions.
The total value of the two M&A deals in 2007 in the aviation space is pegged at around $465.12 million. In comparison, the value of 14-odd PE deals between 2005 and 2007 had brought in $142.46 million. The average transaction value to sales ratio has been 1.63.
The ratio was higher for the PE deals compared to the recent strategic M&A deals. This means that the strategic acquisitions deals of Jet-Sahara and Kingfisher-Air Deccan, have been struck at lower transaction value to sales ratio than private equity(PE) deals struck in 2005 and 2006, according to advisory firm Grant Thornton. The sales referred to here are the company’s sales.
The difference in deal valuations come at a time when the industry is going through a consolidation phase. The majority of equity deals struck this year has been strategic in nature, either an acquisition or a merger, as in the case of Air India-Indian Airlines. There has been just a single PE deal in aviation this year compared to five in 2005 and eight in 2006.
07/09/07 Sudipto Dey & Vivek Sinha/Economic Times

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Categories: General Aviation Sep 2007