Signature Reaches $4.6 Billion GIP Deal, Keeps Options Open

The pursuit of Signature Aviation Plc turned into a three-way contest, with Global Infrastructure Partners rejoining the battle for the world’s largest operator of private-jet bases after an earlier bid was rejected.

Signature Aviation agreed Monday to a $4.63 billion buyout by GIP, while leaving the door open for higher offers. Investors will receive $5.50 per share held, equivalent to about 405 pence at current exchange rates, according to a statement.

Shares of the U.K. company surged as much as 9.6% in anticipation of a bidding war involving Blackstone Group Inc. and its ally Bill Gates, Signature Aviation’s biggest shareholder. Carlyle Group said last week that it was also considering jumping in.

“Nothing precludes either Blackstone and Cascade or Carlyle from making an offer proposal that the board of Signature Aviation will consider,” the company said in an email.

The contest for Signature Aviation, which changed its name from BBA Aviation about a year ago, pits three of the world’s top financial investors against each other while drawing in Microsoft Corp. founder Gates, the world’s third-richest man. Infrastructure funds are flush with cash and are locking horns over investment targets.

GIP, led by former Credit Suisse executive Adebayo Ogunlesi, owns aviation assets including Edinburgh Airport, while managing a fund that owns a stake in London Gatwick. It said it sees opportunities for organic growth and bolt-on acquisitions at Signature Aviation.

“We plan to put customer service, operational consistency and growth at the heart of our strategy,” Ogunlesi said in a statement.

Signature Aviation was up 8.7% to 441.10 pence at noon in London. The shares have gained more than 50% since mid-December, when talks with Blackstone were first reported.

GIP’s recent deals include a $10.1 billion acquisition of natural-gas pipelines from Abu Dhabi as part of a consortium. In August, Bloomberg reported it was weighing a joint bid with Blackstone for Kansas City Southern railroad.

With the U.K. contest, the two U.K. private-equity firms are on opposite sides. GIP made an earlier, lower offer in December that was rejected by Signature Aviation. Blackstone teamed with Microsoft Corp. founder Gates’s Cascade Investment LLC after its December approach, and has until Jan. 14 to formalize its interest. Carlyle has until Feb. 4.

Gates Edge

Gates’ involvement with Blackstone could make it more difficult for others to win. Cascade agreed not to join any other bidding group and pledged to vote against any rival bids if Blackstone makes a firm proposal. Gates owns 19% of Signature Aviation.

The auction is already attracting attention, with Egyptian billionaire Nassef Sawiris picking up about $11 million in added Signature shares last week. NNS, Sawiris’ investment vehicle, paid just over 405 pence a share to increase its stake to 7.41%, according to a regulatory filing on Monday.

“The share price was telling you someone was going to come in with a better offer than the level indicated by Blackstone,” said Liberum analyst Gerald Khoo.

The Blackstone-Cascade group is most likely to come in with a higher offer, Khoo said. However, he added, the current share price is already much higher than its previous proposal of $5.17, or 381 pence, a share.

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