Bought helicopter service provider, gaining 46 helicopters and 29 charter aircraft.
Bristow Group Inc., Houston, (NYSE: BRS) has acquired a 42.5% interest in Brazil-based helicopter and executive aviation services provider Lider Aviacao Holding SA for $174 million. Lider operates the largest helicopter fleet in Brazil, with 46 helicopters serving the oil and gas industry, representing approximately 50% of the oil and gas market in Brazil. Its helicopter operation is the most profitable business segment and has been growing revenues at a compounded annual rate of more than 22% in the past three years. Lider's fleet has 46 helicopters and 29 charter aircraft. Bristow Group president and chief executive William Chiles says, "We view Brazil as the next North Sea in terms of its potential for growth in offshore services requirements. This investment in Lider represents our most attractive entry point into a new market that is a critical part of our long-term growth strategy. In addition to earnings from our investment, we will be leasing aircraft to Lider in response to the demand for new helicopters." Concurrent with the acquisition, Lider purchased one large and four medium aircraft from the company valued at approximately $55 million, resulting in a net cash outlay by Bristow of $119 million. The terms of the purchase agreement include incremental earn-out payments based on the achievements of clearly defined annual and/or cumulative EBITDA growth targets during the next three years. If fully earned, these payments would total up to $53 million and would imply an enterprise value to EBITDA multiple of approximately 7x for 2009-2011. For the next five years, Bristow will have the right to provide 100% of Lider's helicopter lease requirements as well as the right to lease 50% of Lider's total medium and large helicopter requirements that Lider would otherwise fulfill through the purchase or finance lease of helicopters. Lider chief executive Eduardo Vaz says, "It is with great pleasure that we partner with Bristow. We have similar corporate cultures and core values. I believe further integration of our industry-leading capabilities through combined ownership will enhance the services to our customers in Brazil and open up new opportunities for both companies in other parts of South America." Bristow Group senior vice president, western hemisphere, Mark B. Duncan says, "The new sub-salt developments in Brazil, which are located approximately 200 nautical miles offshore, are expected to generate significant demand for new helicopters over the next several years. In addition, a minimum of an estimated 30 new medium and large helicopters should be needed in the Brazilian oil and gas market in the next five years to meet the expected growth in activity levels and to replace aging aircraft." Bristow will have approximately 20% of the voting rights of Lider and the right to appoint one of the five Lider board members and one management position. JPMorgan was financial advisor to Bristow.