Bloomberg News

Beechcraft Said to Attract Interest From Embraer, Mahindra (2)

October 22, 2013

Beechcraft Corp., the U.S. planemaker that exited bankruptcy protection in February, has drawn takeover interest from at least three suitors, including Brazil’s Embraer SA (EMBR3) and India’s Mahindra & Mahindra Ltd., said people familiar with the matter.

Cessna parent Textron Inc. (TXT:US) also is looking, said the people, who asked not to be named since the process is private. First-round bids are in and Beechcraft’s management team is scheduling talks with potential bidders, one of the people said. It isn’t clear which companies submitted offers.

Beechcraft is reviving the auction process a year after its deal to sell itself to a Chinese jetmaker collapsed. The sale may fetch about $1.5 billion, a person with knowledge of the process said last week. Buying the company would provide either Mahindra or Embraer with an easy way to expand in the North American aerospace industry, said Richard Aboulafia, an analyst at the Teal Group in Fairfax, Virginia.

Going with Mahindra’s “own indigenous development program, which is what they’ve been looking at, has a much higher risk than acquiring Beechcraft,” Aboulafia said in an interview. “If you can get a good deal on an existing family of planes, that’s definitely an easier way.”

Centerbridge Partners LP, Sankaty Advisors LLC and Angelo Gordon & Co. are among the firms that own about 90 percent of Wichita, Kansas-based Beechcraft. Credit Suisse Group AG was contacting suitors about conducting due diligence on Beechcraft as of last week, people with knowledge of the matter said then.

Mahindra Interest

Representatives for Beechcraft, Embraer, Textron, Credit Suisse and Mahindra (MM) declined to comment.

Mahindra expressed interest when Beechcraft was in bankruptcy last year, one of the people said. While it looked again more recently, Beechcraft’s price expectations may deter the Indian industrial conglomerate, according to that person.

The planemaker is in the process of closing down a money-losing jet aircraft business and is focusing on its propeller-drive aircraft line. In August, Beechcraft announced a $1.4 billion contract to sell and service its King Air planes for private aviation firm Wheels Up. The deal was the largest propeller-aviation transaction in history, the company said in a statement.

Slumping demand for private jets and curbs on U.S. defense spending led the company, formerly known as Hawker Beechcraft, to file for bankruptcy in May 2012. Negotiations to sell it for $1.79 billion to Superior Aviation Beijing Co. collapsed months later. Since emerging from bankruptcy, Beechcraft has said it’s selling Hawker assets to focus on propeller-driven and military planes.

To contact the reporters on this story: David Welch in New York at dwelch12@bloomberg.net; Caroline Chen in New York at cchen509@bloomberg.net

To contact the editors responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net; Ed Dufner at edufner@bloomberg.net


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