France's Vinci to acquire majority stake in Gatwick for £2.9 billion

London

VINCI SA agreed to acquire a majority stake in Gatwick Airport for £2.9 billion (S$5 billion) as the French construction company expands its portfolio of aviation infrastructure with a major London hub.

The purchase of the 50.01 per cent stake from a group of investors including sovereign wealth funds from Abu Dhabi and Australia will be completed in the first half of 2019, the Rueil-Malmaison, France-based company said on Thursday in a statement.

Existing shareholder Global Infrastructure Partners will manage the other 49.99 per cent.

With 45.7 million passengers in 2018, Gatwick will become the largest single airport in Vinci's global network.

Gatwick has been under pressure due to intensifying competition from London's other airports and lost out to Heathrow, Europe's busiest hub, in a contest to win government backing for the construction of a new runway.

Its operations descended into chaos just before Christmas after drones spotted around the runway led to a prolonged shutdown.

Prior to the deal, Gatwick had outlined £1.11 billion in investment plans to expand the capacity of its two terminals in the next five years.

It is already the world's busiest single-runway hub, and the biggest base for discount carrier EasyJet plc and the focus for long-haul leisure flights at British Airways.

The sale values Gatwick at less than 20 times earnings before interest, tax, depreciation and amortisation, according to a presentation by Vinci.

Global Infrastructure Partners, which manages more than US$40 billion in assets from ports and airports to a vast wind farm in the North Sea, bought London's second-busiest airport with the consortium of investors in 2009 for about £1.5 billion.

Gatwick reported earnings of £411.2 million in the fiscal year till March, on revenue of £764.2 million.

Vinci managed 35 airports as at the end of last year, in countries including Japan, Brazil, France and Cambodia. The company also operates toll roads and a construction business. Its shares have fallen 17 per cent this year, valuing Vinci at 42.1 billion euros (S$65.9 billion). BLOOMBERG