International aerospace engineering group MB Aerospace has today (Monday, March 18th) announced the completion of a secondary MBO which will provide significant funding for a planned series of acquisitions.
Following strong growth and with a pipeline of significant opportunities, MB Aerospace has successfully attracted support from new investors Washington DC-based private equity fund Arlington Capital Partners (‘Arlington’). As part of the secondary buyout, Arlington will take a majority stake in the business alongside the MB Aerospace management team.
MB Aerospace, which has manufacturing operations in the UK and the US, is also in discussions with a number of acquisition targets in the United States which will see the group expand considerably from its current turnover of over $80 million.
MB Aerospace’s chief executive Craig Gallagher, who led the original MBO of the company from engineering group Motherwell Bridge in 2007, will be Chief Executive Officer of the enlarged business and will be joined by Gregor Goodwin as Chief Financial Officer.
Mr Gallagher said: “This landmark deal represents a great vote of confidence in our US and UK employees and operations, as well as providing the group with significant opportunities for further expansion in the months and years ahead.
“Our vision of creating a truly world-class aerospace business focussed on aero-engine components is developing at pace, with the acquisitions in the past 15 months of Gentz Aero of Detroit and Thomson Aero of Somerset, UK allowing us to further grow our manufacturing operations whilst securing significant remit extensions for our supply chain management services and complementary engineering support services.”
MB Aerospace already supplies many key names in the aerospace and defence industries, providing supply chain integration services alongside the manufacture and repair of complex aero-engine components. Key customers include Pratt & Whitney, Rolls-Royce, General Electric, Boeing, United Technologies, GKN, Mitsubishi Heavy Industries and Volvo Aerospace.
Mr Gallagher said the deal with Arlington represented a superb fit: “They already have extensive aerospace and defence experience and, as well as providing funding for future deals, their specialised global track record in our sector will be invaluable as we seek to expand further.
“Our performance since the MBO in 2007 has been very positive, with turnover growing from $28m in FY2008 to $81m in FY2012 and is testament to the consistent strategy that we have been following, alongside synergies between our operations in the UK and US, the hard work of our people and the backing we’ve enjoyed from LDC. The LDC team has been a real support to us in the last five years as we re-shaped a diverse group of engineering operations through six major transactions to emerge as a dedicated aerospace components business with lines of activity into all key aero-engine OEMs.
“We are excited about the opportunity to partner with Craig Gallagher and the rest of MB Aerospace’s world-class management team,” said Peter Manos, a Managing Partner at Arlington. “This deal creates a global platform with a unique focus on providing manufacturing, engineering and supply chain management services for mature and legacy engine platforms, and we believe the company’s strong growth prospects will be further enhanced with additional acquisitions.”
John Garner, Head of LDC in Yorkshire and the North East, commented: “In MB Aerospace, we recognised the opportunity to partner with a high-quality management team and support a business with significant organic and acquisitive growth potential.
“The company has developed into an international components manufacturer of scale, capitalising on a buoyant aerospace and defence industry by increasing its production capabilities and establishing a presence in North America through strategic acquisition.
“Having worked closely with the management team since 2007, the deal represents an excellent outcome for all parties. Arlington Capital Partners shares MB Aerospace’s vision and is the ideal investor to support its continued international growth.”
Craig Gallagher said: “We see really exciting opportunities in the years ahead, as the global airline sector is expected to grow significantly over the next two decades, doubling from its current 20,000 aircraft by the early 2030s.
“This growth is being fuelled by the rising demand for travel in Asia coupled with the need of European and American airlines to replace ageing aircraft, dramatically increasing the demand for the wide range of world-class manufacturing and aftermarket services we already provide to some of the world’s biggest aviation players. The global installed base of gas turbine aero-engine derivatives is over 200,000 units across various aerospace, defence and industrial applications and the majority of this fleet is expected to be growing and in service for several decades to come.
“Key sections of the global aerospace supply chain were designed several decades ago and have become fragmented along commodity lines. MB Aerospace performs a critical role in ensuring part availability for aftermarket engines by sourcing components from robust sources and underpinning our supply chain remits with high-skill and high-performing manufacturing facilities for legacy and low-volume components.”