Italy's Avio in sale talks as hopes of listing fade - sources

Fri Nov 2, 2012 9:32am EDT

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By Massimo Gaia and Simon Meads

MILAN/LONDON, Nov 2 (Reuters) - The private equity owners of Italy's Avio are pressing ahead with talks to sell the airplane engine parts maker, as a planned listing looks less likely, sources close to the deal said.

In May Avio revived plans to go public, filing to list on the Milan bourse, but the following month sources told Reuters the company had postponed the offering for the second time in a year due to market conditions.

Although Europe's moribund new listings market has started to show some signs of life after months of inactivity due to the euro zone debt crisis, the outlook is far from robust and many companies are still exploring alternative options.

A consortium of buyers made up of private equity funds CVC Capital Partners and Clessidra, and state-backed Fondo Strategico Italiano (FSI), are now pushing ahead with talks to buy Avio, four so u rces close to the deal said, with an agreement possible before the end of the year.

"The market conditions are there to complete the deal. In particular, the bond market has reopened in the U.S. which would allow a buyout to be funded," said one source close to the deal.

Avio is owned by BCV Investments, in which Cinven private equity has a majority. Cinven bought Avio in 2006 in a deal that valued the company at about 2.6 billion euros.

In May, Finmeccanica said it had agreed to sell the 14 percent stake it holds in Avio via BCV to FSI as part of a planned listing.

Three of the sources said an initial public offering was no longer on the cards, although the company has regulatory approval to list up until the middle of 2013 so this would still be an option if plans for a sale fell through.

"I don't see any acceleration that would lead to an agreement in one or two weeks. But perhaps something will be agreed by the end of the year," one of the sources said of the planned sale.

Avio, which supplies engine parts for the Eurofighter Typhoon and engine makers General Electric and Rolls Royce, has previously been in talks with other potential bidders including France's Safran but the sources said the government did not want Avio to fall into foreign hands.

Cinven and CVC declined to comment, while Avio and Clessidra were not available.