Carlyle's Arinc draws takeover interest from GE, Rockwell-sources

NEW YORK Tue Jun 4, 2013 11:22am EDT

NEW YORK (Reuters) - Carlyle Group LP's (CG.O) aerospace communications firm Arinc Inc has drawn early takeover interest from industry conglomerates and private equity firms in an auction that may fetch between $1.3 billion and $1.4 billion, several people familiar with the matter said.

General Electric Co (GE.N), Rockwell Collins Inc (COL.N) and Thales SA (TCFP.PA) are among aerospace companies that have shown preliminary interest in bidding for Arinc, the sources said on Tuesday.

Major buyout firms are also evaluating a deal and plan to make offers by a June 10 deadline for first-round bids, said the sources, who asked not to be identified because the auction is not public.

Representatives for Carlyle, GE, Rockwell Collins and Thales declined to comment.

Reuters reported on February 25 that Carlyle hired JPMorgan Chase & Co (JPM.N) and Evercore Partners Inc (EVR.N) to find a buyer for Arinc, which it acquired from six U.S. airlines in 2007 for an undisclosed sum.

The auction comes as private equity funds are flush with capital and tapping cheap debt financing markets to pay for assets, creating competition for trade buyers and a robust auction process for sellers.

Annapolis, Maryland-based Arinc, founded in 1929, designs systems that help airline pilots communicate with the ground. It also provides transport communications and systems for defense, government, healthcare, networks and security sectors.

Carlyle tried to sell Arinc in 2010 but scrapped an auction after strategic buyers expressed little interest in purchasing the company as a whole, partly due to concerns over Arinc's government consulting services, sources said at the time.

Many defense companies had long offered services that included advising government agencies on programs on which they ended up bidding, creating conflicts of interest. That prompted the U.S. Congress to pass a law requiring the Department of Defense to tighten rules on potential conflicts.

Arinc sold the government consulting division to Booz Allen Hamilton Holding Corp (BAH.N) late last year, getting rid of a business that potential buyers found unattractive in the previous auction, sources said.

With the sale, Arinc appears to be a more attractive takeover target for industry buyers, the people said.

(Reporting by Soyoung Kim in New York; Editing by Jeffrey Benkoe)