Carlyle Group picks up communications major, Arinc Inc, for $650 million

Annapolis, USA: Arinc Inc, a communications systems provider has announced a deal with the Carlyle Group under which it will be taken over for $650 million, according to informal industry estimates.

Founded in 1929, the Annapolis-based company, which employs more than 3,300 worldwide, develops and operates communications systems used by airports and airlines as well as defence, government and surface transportation firms.

Founded to serve airlines, Arinc now collects more than half of its $900 million in annual revenue from the Pentagon and other non-airline buyers. This continues to be an area of promising growth, as the military continues efforts to improve its real-time communications capabilities.

Though terms of the deal were not disclosed, American Airlines Inc and United Airlines Inc, two of Arinc's three-dozen corporate shareholders, said in securities filings that they expected proceeds of $194 million and $125 million, respectively, for their stakes. According to aviation industry sources, American Airlines is Arinc's largest shareholder with a stake approaching 30%, which, if correct, would value Arinc at $650 million.

Arinc hired Goldman, Sachs & Co in April 2006 to look for a suitable single owner willing to provide the capital infusion needed for company growth. In a statement company chairman and CEO, John M. Belcher said, "We have worked very hard to find a partner who shares our vision and believe that Carlyle's international presence, financial resources and expertise in the aerospace, defence and communications sectors will be instrumental in the continued expansion of our business."

Carlyle managing director, Peter Clare, in a statement said his firm has "long admired Arinc's leadership position and impressive track record of growth," adding "we believe that Arinc is well positioned to capitalize on several favorable macro trends in both its commercial and government market segments."

The deal is expected to close in the third quarter. In addition to American and United, other Arinc holders include Ford Motor Co., Raytheon Co., Goodyear Tire & Rubber Co., FedEx Corp., Boeing Co. and a number of US and international airlines.

Established in 1987, The Carlyle Group is a premier global private equity firm.