News: AQZ Alliance Aviation Services Announces Update To Wet Lease Agreement With Qantas, page-11

The AFR is reporting that Cobham Aviation is up for sale. Cobham is currently owned by Advent International, a Private Equity (PE) firm. It is reported that Cobham Australia had a turnover of $368m and EBITDA of $87m in the December 2020 year, with the majority of the earnings coming from special mission flying (airborne surveillance and search and rescue). The AFR speculates it could be worth up to $1.5b. Analysts suggest that PE, particularly those that missed out on Virgin Australia, will be interested and also go onto say it would make sense for Alliance to take a look in an effort to create a stringer No. 3 player in the market.

Its interesting that with a PE vendor that the suggested purchasers are also PE.

I'd be surprised in Alliance was interested, certainly not at the value being bandied about. With Alliances market capitalisation at $640m and an enterprise value of about $800m, it looks like too big a deal to pick off. Also, I assume their priorities of the next couple of years is to successfully bed down the E190 expansion. The QAN shareholding in AQZ would also likely be a stumbling block.

If Cobham has an EV of $1.5b based on the above metrics, it does make AQZ's value pretty attractive in comparison. Maybe a PE purchaser of Cobham would be keen to combine it with AQZ (if they could shake QAN from the share register).