Chris Jasper/LONDON
BFGoodrich and US aircraft maintenance specialist Aviation Sales have held talks about a possible merger, say industry sources, adding that negotiations have petered out as Aviation Sales faces a possible court action over claims that it issued misleading statements on demand for its services and likely earnings.
BFGoodrich, based in North Carolina, is already the world's largest third-party-only maintenance, repair and overhaul (MRO) provider. A takeover of Miami-based Aviation Sales would create a new industry giant able to match up to airline MRO subsidiaries in size. The Florida-company has itself grown significantly in the last few years through an aggressive take-over strategy of its own.
Threatened court action by a number of US legal firms representing investors in Aviation Sales has cast a cloud over a possible deal, however. The class actions have been filed on behalf of individuals and institutions who purchased stock in the company between 11 June and 17 September.
New York-based Milberg Weiss made the first filing against Aviation Sales earlier this month, alleging that "certain of its officers and directors issued a series of materially false and misleading statements regarding the growing demand for the company's services, its operations and earnings".
The complaint alleges that during the class period it was "represented to the investing public that Aviation Sales expected an increase in demand for its services in the areas of MRO, aircraft spare parts redistribution and manufacturing", but that "in fact-at the time these statements were made the company's management information systems revealed a decline in sales in these areas due to order slowdowns, cancellations and the extension of delivery dates".
Kenneth Raton, partner at Milberg Weiss' Boca Raton office, says the filing is likely to be consolidated with several other actions, but will not go to court until well into next year.
Aviation Sales points out that its own directors purchased a total of 221,000 shares in the company between 30 September and 5 October, and claims the purchases "illustrate our confidence in the financial strength of the company". The Aviation Sales share price fell 36% on 18 September after the business revealed its results would not meet expectations due to knock-on effects of Boeing production slow-down.
Source: Flight International
