Mahindra & Mahindra Ltd. (MM), India’s biggest maker of utility vehicles, is considering bidding for Hawker Beechcraft Inc., the bankrupt aircraft maker part owned by Goldman Sachs Group Inc. (GS), a person with knowledge of the matter said.
Hawker would fit well with Mahindra because both produce turboprop aircraft, said the person, who asked not to be identified because the deliberations are private. The Mumbai- based company has not decided whether to make an offer, the person said. Roma Balwani, a spokeswoman for Mahindra, said the company doesn’t comment on speculation.
Mahindra, which purchased majority stakes in component maker Aerostaff Australia and turboprop aircraft manufacturer Gippsland Aeronautics in 2009, has been in talks with India’s National Aerospace Laboratories on possibly partnering for a regional jet. A successful bid for the business jet-maker will catapult Mahindra into the aerospace market as a manufacturer, according to Dhiraj Mathur of PricewaterhouseCoopers LLP.
“This is a sensible move as with an acquisition, they get access to years’ worth of technology and certification,” said Mathur, a Gurgaon, India-based executive director at PwC’s unit. “Mahindra will jump up the value chain. It’ll give them aersopace capabilities. They will be able to participate as an OEM and not a partner of an OEM.”
Ssangyong Purchase
Shares of Mahindra were little changed at 718.55 rupees yesterday in Mumbai. They have gained 5.4 percent this year, compared with a 13 percent increase in the benchmark Sensitive Index. (SENSEX) Of the 61 analysts who track the stock, 46 recommend buying the shares, according to data compiled by Bloomberg.
Mahindra Group is a conglomerate with 110 subsidiaries in finance, information technology, real estate and resorts. Mahindra last year acquired 70 percent of South Korean automaker Ssangyong Motor Co. (003620) for $378 million.
The tractor maker, which formed its aerospace division in 2007, makes light aircraft, as well as parts for Boeing Co. (BA)’s 737s, Gulfstream Aerospace Corp. business jets and Lockheed Martin Corp. (LMT)’s F-35 Joint Strike Fighters, according to its website.
The company had cash and short-term investments of 54 billion rupees ($989 million) as of March 31, according to data compiled by Bloomberg.
The Indian automaker in March said it was in exploratory talks with National Aerospace to partner the state-owned plane designer in developing a planned regional jet. NAL last year announced the 40 billion-rupee plan to develop a 90-seat aircraft as the country joins China in trying to form a globally competitive aerospace industry.
Revamp Plan
Hawker, which makes the Beechcraft King Air turboprop and the Hawker 4000 business jet, filed a reorganization plan in U.S. Bankruptcy Court on June 30 that would give control of the Wichita, Kansas-based company to secured creditors who hold debt valued at almost $922 million.
Goldman Sachs Capital Partners, the fifth-biggest U.S. bank’s private-equity arm, and Toronto-based Onex Corp. (OCX) bought Hawker in 2007 for $3.3 billion. Hawker reported net losses totaling more than $900 million in the past two years as U.S. military contracts and plane sales declined.
Hawker competes with Cessna Aircraft Co, Embraer SA (EMBR3), Gulfstream Aerospace Corp. and Bombardier Inc. (BBD/B) to supply business jets in the mid- and light-aircraft categories.
To contact the reporter on this story: Siddharth Philip in Mumbai at sphilip3@bloomberg.net
To contact the editor responsible for this story: Chua Kong Ho at kchua6@bloomberg.net
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