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Better Capital Mulls More Aerospace Deals After Gardner Overhaul

Private equity firm Better Capital, owner of Reader’s Digest and fashion retail store Jaeger, would consider more deals in aerospace after sales at its aircraft components business more than doubled.

Gardner Aeropace’s annual sales have increased to about 115 million pounds ($180 million) from 50 million pounds when it was purchased more than three years ago, Nick Sanders, head of portfolio at Better Capital, said in an interview. The business was Better Capital’s first acquisition and was bought from Carlyle Group LP in February 2010.

“If another opportunity in the supply chain came up the fund would look at it very seriously,” Sanders said. “The supply chain has needed rationalizing for some time and it is starting to happen.”

Sanders said he sees more than half a dozen potential turnaround targets in Europe that Better Capital might be interested in. The fund could do deals involving companies with sales of about 500 million pounds, he said. Suppliers to Boeing Co. and Airbus SAS are benefiting from large order-books and production at record levels for many aircraft models. High output rates have also exposed stresses among suppliers that have struggled to keep pace with demand.

Growth Platform

Gardner, which principally supplies Airbus and has about equal work on the A380 superjumbo, for which it makes doors, the A350 long-range jet, and the A400M military airlifter, has partly grown through acquisitions, including last year’s purchase of Airia SAS in France. The company also is targeting work with other planemakers, Sanders said.

“The business now has a good platform to grow,” Sanders said. The company was on track to lose money three years ago before restructuring improved quality and modernized production sites, he said.

Better Capital will eventually seek to exit its Gardner holding, and the most likely option is a sale to a trade buyer, Sanders said. That would probably happen only after the Airbus A350 has entered service, he said.

Airbus plans to deliver the first A350 next year after an inaugural test flight in June. The Toulouse-based planemaker had booked 682 firm A350 orders through July for the plane, which competes with the Boeing 787 Dreamliner and 777.

To help keep costs down, Gardner has acquired interests in Poland and India, where it has set up a joint venture with Pranita Engineering. More than half of Gardner’s 1,500 employees are now outside the U.K.

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