Rolls, Babcock Sell Air-Refueling Stakes for $435 Million

(Bloomberg) -- Rolls-Royce Holdings Plc and Babcock International Group Plc sold their combined 39% stake in AirTanker Holdings Ltd. for 315 million pounds ($435 million) as the U.K. firms seek to shore up depleted balance sheets. 

Equitix Investment Management Ltd. will pay 189 million pounds for Rolls’s 23.1% stake in the air-to-air refueling company, which serves Britain’s Royal Air Force, and 126 million pounds for Babcock’s 15.4%, according to statements Monday. Both amounts include the repayment of shareholder loans.

Rolls-Royce and Babcock have embarked on turnaround efforts and are selling assets as they focus on core operations. Rolls aims to raise more than 2 billion pounds from disposals after the coronavirus hit demand for its large jetliner engines, while Babcock Chief Executive Officer David Lockwood is trying to raise at least 400 million pounds after years of disappointing results. 

Even as Rolls-Royce and Babcock sell AirTanker Holdings, they’ll maintain their shares in the services arm, which provides operational support to the RAF’S 14 adapted Airbus SE A330 aircraft, known as Voyagers. 

Shares of Rolls-Royce traded 1% higher as of 8:19 a.m. in London, while Babcock was up 0.8%. Both companies are based in the U.K. capital.

Aerospace For Sale

U.K. aerospace and defense firms have become a popular target for buyers, including private-equity firms. 

The government is investigating the proposed purchase of Ultra Electronics Holdings Plc by PE-owned Cobham Ltd., while business Secretary Kwasi Kwarteng has said he’s monitoring Parker-Hannifin Corp.’s plan to buy out parts supplier Meggitt Plc for 6.3 billion-pounds.

The AirTanker sale is conditional on regulatory approvals and should complete by the end of 2021, according to a statement from Ashurst, the law firm advising the two manufacturers on the sale. The majority of the business will remain under the control of Airbus SE and Thales SA.

©2021 Bloomberg L.P.