Dubai Aerospace Arm Makes EUR1bn Swoop For Swiss Firm

by Lorys Charalambous, Tax-News.com, Cyprus

11 September 2006

Dubai Aerospace Enterprise (DAE), a consortium of three UAE investors with a strategic investment interest in the aerospace industry is to acquire Zurich-based SR Technics, a leading independent provider of technical services in the aircraft industry in a EUR1 billion deal.

The consortium will hold a majority stake of more than 90% of SR Technics; of this stake, Mubadala Development will own 40% and both DAE and Istithmar will hold 30% each. The Share Purchase Agreement was signed in Zurich last Thursday.

SR Technics, formerly a subsidiary of the former Swiss national airline Swissair until its demise in 2001, had been owned by private-equity investors 3i (56%) and Star Capital (20%), SR Technics’ management (12%) and other institutional investors since 2002.

The deal represents the most significant acquisition involving DAE since it was launched by the government of Dubai in February with the intention of investing $15 billion in aerospace manufacturing and aviation services, in a bid to transform the Gulf state into a leading player in the sector within 10 years.

“The long-term strategic investment interest of the buyers, their considerable financial means and their excellent contacts make this transaction the best strategic option for SR Technics,” commented Frank Turner, who remains Chairman of SR Technics’ Board of Directors.

“The consortium recognises SR Technics as a leader in the industry and sees tremendous growth potential for our company throughout the world," he added.

According to the Dubai International Financial Centre, airline passenger traffic in the Middle East and Asia (especially China) is expected to grow as much as 9% a year for the next 10 years, reaching 1.7 billion passengers by 2015. Annual air freight growth is also expected to exceed 6% a year. India and China alone plan more than 145 airport projects in the decade – including greenfield builds, expansions and upgrades.

Dubai expects that, within a decade, the industry will have emerged as one of its richest sources of revenue. Some 30,000 new jobs will be created through DAE activities and 8,000 students a year will pass through a new university.

Recommended