"""With BBA Aviation I reacted much more positively when amber blinked."""
""""Then came the announcement of a planned major transformational acquisition of rival group Landmark Aviation for £1.3bn to be financed by debt and a major rights issue."""
"""""" Commentators were sceptical, concerned by debts levels and the fact that the deal would not be earnings enhancing until 2017. As BBAs price moved further south I moved to protect my profit by selling out entirely at 283p.""""
I spent two minutes on this and all I've looked at is the RNS, but it looks a bit pricey at first blush. I'd always be nervous of buying anything from the likes of Carlyle, and it's not a good sign when BBA allow for the benefit of the cost and tax synergies before they quantify the deal on an EBITDA multiple basis (if you see what I mean).
The market seems to like it, though, despite the massive discount at which the placing has been, erm, placed.
At least it's a biznay that BBA knows well and FBO has always struck me as a good one to be in. The customers have plenty of money and there are always shedloads of opportunities to ream 'em from ahole to breakfast without them having much opportunity of switching easily to another FBO. That's a good place to be in (unless you're the customer LOL).
So, a pretty ballsy deal. It might work ... or BBA might fall flat on its face. Hope that helps!
LKH on the flybridge unlikely to put his own shilling into BBA
I haven't looked at the accounts, or indeed at any aspect of the company other than having a sketchy impression of what it does, but, if the cash flow doesn't synch with the reported earnings, I'd be reaching for my hero Terry Smith's book 'Accounting for Growth' in order to bring myself up to speed on the risks associated with the interesting stats you flag up.
Over the last 5 years (2010 to 2014) the company reported rising profits - £100M in 2010 and £162M in 2014, but it wasn't a linear or regular growth.
But the operating profits are flat or slightly down at £153M in 2010 and only £151M in 2014, despite the revenue having risen from £1.83Bn to £2.29Bn - a rise of 25%.
Something is screwy here in that there is a big mismatch between the reported post tax profits and the operating profits.
Also during that same 5 year period, despite no change in operating profits, borrowings rose from £505M to £778M a rise of 54%
So unless they are investing very heavily in new growth potential somewhere, (haven't dug deep enough) they are increasing debt yet real income is doing nothing despite 25% revenue growth and a 54% growth in borrowings.
Creative accounting perhaps?
Games - need to understand why the above before buying into this one - Bill Gates or not.
"Anybody have any views, positive or negative on BBA?"
I vaguely recall that they used to have two totally different biznays ... didn't they make sanitary napkins or summat like that as well as the good old FBO stuff? Something really weird anyhoo, which they have now ditched? That split of interests turned me off back in the day, not that I have anything but the greatest of respect for Procter and Gamble despite being a proud ULVR shareholder.
I shall take another look at BBA when I have a moment and let you know what I think. There is clearly money to be made in the General Aviation biznay.
Published at 12:01AM, August 28 2013
Like people all over the Western world, the top brass at BBA Aviation appear to have put off taking a long holiday in a far-off destination this summer. Instead, they have been cooking up a £2.8 billion merger with a rival based in the United States, its biggest market.
After a report in The Sunday Times
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