China’s HNA Said in Talks for $3b Swissport Purchase

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HNA Group Co., owner of China’s fourth-largest airline, is in talks to acquire airport luggage handler Swissport International Ltd. as Chinese buyers continue to hunt for European assets, people familiar with the matter said.

Swissport’s private-equity owner PAI Partners SAS is seeking about $3 billion from a sale, the people said, asking not to be identified because the information is private. Negotiations could still fall apart, as the two parties have struggled to agree on price in the past several months, according to the people.

Alongside a sale, PAI is also exploring an initial public offering with banks, as well as potential takeover interest from other parties, two of the people said. A listing of Swissport could value the business at more than $3 billion, one person said. At that price, it would be the fifth-biggest acquisition in Europe by a Chinese company, according to data compiled by Bloomberg.

HNA, based on a tropical island in southern China, is seeking to add to its more than 450 billion yuan ($72 billion) of assets that include Chinese carrier Hainan Airlines Co. and container lessor SeaCo Srl. PAI agreed to acquire Zurich-based Swissport, which provides ground handling and cargo services to about 700 aviation customers, for more than $900 million in 2010.

Syndicated Loan

Swissport has more than 60,000 employees and generates annual revenue of about 3 billion Swiss francs ($3.1 billion). HNA is seeking a syndicated loan of more than $1 billion and is also discussing raising equity to finance the purchase, the people said. Both companies are working with advisers, they said.

Shares of HNA Infrastructure Co., operator of the airport in the Chinese conglomerate’s home town, advanced 2.2 percent at 11:40 a.m. in Hong Kong trading Friday. Hainan Airlines’s local-currency stock rose 1 percent at the mid-day break in Shanghai while HNA Investment Group Co., a property-development arm of the group, gained 2.3 percent in Shenzhen. Representatives for HNA, PAI and Swissport declined to comment.

PAI has backed Swissport’s expansion via acquisitions, including the purchase of aviation ground-handling company Servisair from Derichebourg SA in 2013. That agreement added about 15,000 employees and came five months after the company announced plans to buy a majority of the ground-handling operations of SAS Group.

Chinese companies are increasingly looking for European assets. China National Chemical Corp. in March made a bid for Milan-based Pirelli & C. SpA that valued the Italian tire maker at about 7.4 billion euros ($8.1 billion).

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