Thursday, July 11, 2013

Reuters Helps Carlyle Drive Up ARINC Bids?

Reuters reported:

Carlyle Group LP is betting that industrial companies rather than buyout firms are more likely to meet its target price of up to $1.5 billion for the aerospace communications firm Arinc Inc, according to four people familiar with the matter.

Industrial conglomerate Honeywell International Inc and travel technology company Amadeus IT Holding SA are weighing offers in the second round of bidding for Arinc, the sources said, adding to the roster of companies participating in the auction previously reported by Reuters.

Lockheed Martin Corp, Rockwell Collins Inc and Thales SA, as well as a handful of private equity firms, also made it through to the second round, sources familiar with the matter told Reuters last month.
This feels like an anonymous White House senior official story, where the leak is intended to signal something to insiders or test public reaction.  Reuters failed to report Carlyle's $1 billion price tag when it shopped ARINC three years ago.

The $1.5 billion target, $500 million more, is for part of the 2010 version of ARINC.  Carlyle monetized ARINC's government consulting division by selling it to Booz Allen Hamilton for $154 million.  This totals $654 million or 65.4% more than what Carlyle hoped to get three years ago.

Reuters also omitted ARINC's 33 month ban by The World Bank for procurement violations, likely code words for bribery.  I wonder how ARINC's executive compensation/sales commissions figured into any illegal payments?

Will Reuters story garner greater interest in bidding, making Carlyle more money?  It remains to be seen.

Update 8-15-13:  Carlyle will sell ARINC to Rockwell-Collins for $1.39 billion. That's 55.4% more than Carlyle wanted three years ago.