Private equity firms CVC Capital Partners Ltd. and Clessidra SGR SpA have bid for Avio SpA, the aerospace supplier owned by U.K. buyout firm Cinven Ltd., four people with knowledge of the process said.
CVC, whose main office is in London, and Clessidra, based in Milan, submitted a firm offer for Avio, valuing the company at more than 3 billion euros ($3.8 billion) including debt, said one of the people, who declined to be identified because the plans are private. While Cinven prefers to list Avio, the British firm may opt for a sale following the outcome of the Greek elections on Sunday, people said.
Cinven, which is raising 5 billion euros for a new buyout fund, delayed plans last year for an initial public offering of Avio after the European debt crisis roiled markets. The firm said in May that it had filed for an IPO in the coming months. A deepening European sovereign debt crisis has further agitated financial markets, making it harder to sell shares.
Cinven received previous approaches for Avio, including from the French aerospace company Safran SA (SAF), which indicated earlier this year that it could offer an amount greater than CVC’s current bid, two of the people said. The Safran plan wasn’t binding, they said.
Safran’s CEO, Jean-Paul Herteman, said in February that the company would “carefully” consider Avio if it was for sale. Safran remains interested in Avio though it may face political obstacles in Italy as a foreign competitor, according to a person with knowledge of the matter.
Vanessa Maydon, a spokeswoman for Cinven in London, declined to comment. A spokeswoman for Clessidra was not immediately available for comment.
Cinven bought Avio, based in Turin, Italy, in 2006 from Carlyle Group and Finmeccanica SpA (FNC) in a deal that valued the company at about 2.6 billion euros. Finmeccanica, Italy’s biggest defense company, last month agreed to sell its 15 percent stake in Avio to Fondo Strategico Italiano SpA, the country’s 4 billion-euro investment fund. The fund would retain the stake as part of the joint offer from CVC and Clessidra.
Europe’s IPO markets have entered a near drought since the Dutch cable company Ziggo NV and Zurich-based DKSH Holdings Ltd. raised a combined $2.2 billion in February. The VStoxx Index, which gauges the volatility of European stocks, surged 48 percent to 35 from this year’s lowest point of 23, reached in April. IPOs typically proceed when the volatility index trades at less than 25. Cinven was considering listing Avio at a valuation of as much as 4 billion euros before the market’s upheaval, one person said.
Avio, founded more than a century ago, makes gearboxes for single-aisle aircraft engines used in European Aeronautic Defence & Space Co.’s Airbus A320neo plane. In 2011, it had more than 2 billion euros of revenue, 383 million euros of earnings before interest, taxes, depreciation and amortization, and 1.4 billion euros of debt, according to its website.
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