Ferrovial agrees to buy Swissport
Ferrovial yesterday agreed to buy Swissport International for Euros 646m (Dollars 790m), expanding the Spanish construction and logistic group's aviation business into passenger and cargo handling.
Swissport, one of the world's largest independent airport handling groups, was sold by Candover, the private equity group that bought the business from bankrupt Swiss flag carrier Swissair in 2002 for Euros 393m.
Candover, which briefly considered a flotation of Swissport, generated a 2.6 times return on its equity investment. Ferrovial already manages four airports, and said the global handling business was growing at 5 per cent a year, with annual revenues of Euros 26bn.
However, the pressures facing suppliers as airlines seek to cut costs has been evident with Gate Gourmet, Swissair's former catering arm, facing administration following losses in the UK and a damaging strike that grounded British Airways flights earlier this month.
Ferrovial said the Swissport purchase was "another step in the company's internationalisation strategy", and will also diversify its business lines. "Entering the handling business is consistent with our strategy of growth in services and complements our activities in urban services, facility management and infrastructure maintenance," said Inigo Meiras, managing director of the services division.
Ferrovial is offering Euros 336m in cash and assuming Swissport's debt, which stood at Euros 310m at the end of 2004.
During Candover's ownership, Swissport made a number of acquisitions, including CSC, a cargo handler, and Groundstar, which handles baggage for low-cost airlines.
Charlie Green, a Candover director, said sales at Swissport, which generated ebitda of Euros 66m last year on revenues of Euros 836m, had grown by 25 per cent since 2002.
"It has played a leading role in the consolidation of the global aviation services industry," he said.
The latest deal is the second acquisition this month by Ferrovial, which has been leading the push into international markets by Spain's so-called "Big Six" construction and services group.
With signs of a cooling-off in the country's seven-year infrastructure and housing boom, these companies have been using steady cashflows and cheap credit to diversify their business and geographical portfolios.
Two weeks ago Ferrovial agreed to pay Euros 178m for Webber, the US-based civil engineering group, to expand its presence in North America.
Swissport, based in Zurich, emerged from the complex rescue arrangements following the collapse of Swissair in October 2001, which included the creation of Swiss International Air Lines as a new national carrier and the sale of support businesses, often to private equity groups.
Swissport went to Candover, while SR Technics, the engineering operation, was sold to 3i, and Gate Gourmet, the catering arm, was acquired by Texas Pacific Group.
Many of the buyers are considering their exit strategies. SR Technics is considering an initial public offering in the next two years.
Candover was advised by Barons Financial Services, Alpha Corporate, and NM Rothschild.
Candover collects 250% return on Swissport investment
The Times, Sec. Business, p 39 08-23-2005
By Daniel Murdoch
CANDOVER, the private equity group, has sold Swissport, a cargo-handling company, reaping a 250 per cent return on its investment over three years.
In a Pounds 448 million deal, the airport service firm -whose customers include easyJet and Ryanair -has been sold to Grupo Ferrovial, Spain's largest construction group, which will pay Euro 336 million (Pounds 228 million) in cash and assume Swissport debt of Euro 310 million.
The deal provides a return of 2.6 times the original cost for the London-based firm, which acquired Swissport from Swissair for Euro 393 million in February 2002. Swissair went into administration during the difficult market conditions that came after the terrorist attacks of September 11, 2001.
Now that the industry has stabilised, however, the value of the business has risen accordingly. Since then turnover at Swissport has increased by 25 per cent to SwFr1.3 billion (Pounds 568 million) and the company has expanded with some large acquisitions, including CSC, the world's biggest independent cargo handler, and Groundstar, Britain's leading handler of no-frills airlines.
The business was further bolstered by Lufthansa's recent acquisition of Swiss International Airlines, one of Swissport's biggest customers, which previously had shown signs of financial trouble.
Swissport employs 21,000 people in 40 countries, including 1,500 in Britain.
Stephan Beerli, director of corporate communications at Swissport, said that there would be no restructuring or job losses.
Ferrovial said that the deal was part of a strategy to expand further into the key European and North American markets. The group, which manages four airports in Europe, Chile and Australia, predicts rapid expansion in the cargo-handling business as air traffic increases and more airlines outsource handling.
Ferrovial acquires Swissport for €646m
Eye for Transport (8/22/2005)
Swissport International has been sold to the Spanish-based Ferrovial Group for €646 million in shares and assumed debt. The transaction is expected to be completed by the end of September, subject to competition and regulatory approval.
Ferrovial will pay €336 million (CHF 520.8 million) for the shares of the Swiss-based company and will assume its debt, which amounted to €310 million (CHF 481.2 million) in December 2004. The acquisition will position Ferrovial as the leading independent player in a sector with considerable growth potential.
“This operation is another step in our company's inter-nationalisation strategy, following the investments we have made in recent years in the construction industry (Budimex in Poland and Webber in the US) and in infrastructure (toll roads in Canada, the USA, Ireland and elsewhere) and airports in Sydney and the UK), as well as services (Amey in the UK),” said Joaquín Ayuso, CEO of Ferrovial. “Integrating this business will also enable us to continue expanding in two markets that are strategically important for Ferrovial: Europe and North America, where Swissport obtains over 90% of its revenues. And with Swissport, we will also be maintaining our focus on businesses with a recurring and stable earnings performance.”
“Entering the airport ground handling business is consistent with our strategy of growth in the services sector, and complements our activities in urban services, facility management and infrastructure maintenance,” added Iñigo Meirás, managing director of the Services Division.
The independent passenger and cargo handling operator, Swissport, serves 177airports in 40 countries on five continents, handling more than 70 million passengers and three million tonnes of cargo a year for 600 customers. With a workforce of some 21,000 employees, the Zurich-based company reported total revenues of €836 million (CHF 1297 million) in 2004. Swissport’s CEO, Joseph In Albon, will remain at the helm after the acquisition.
The passenger and cargo handling business, which is traditionally associated with the airlines and airports themselves, is estimated to be worth €26 billion (CHF 40 billion) in annual revenues. The business is also projected to expand at over 5% per year in the coming years. The growth in air traffic (both passenger and cargo), the worldwide liberalisation of airport management and the growing trend among airlines to outsource their ground handling all support this favourable forecast.
The acquisition of Swissport strengthens Ferrovial's position in the services sector. Ferrovial's Services Division – which has operations in Spain, Portugal and the UK – generated revenues of €2.5 billion in 2004. Ferrovial is also involved in airport management through its Infrastructure Division, and currently manages four airports, in Europe (Bristol and Belfast), Australia (Sydney) and Chile, and was also recently selected as the preferred bidder for the management concession at Exeter Airport in the UK.
