MONTREAL -- CAE has agreed to acquire Bombardier's Business Aircraft Training (BAT) business for a value of $645 million. The BAT business includes a fleet of full-flight simulators (FFS) and training devices covering Bombardier's Learjet, Challenger, and Global business jet product lines. The acquisition is subject to regulatory approvals, and is expected to close by the second half of 2019.
In addition to the agreement to acquire the BAT business, CAE has agreed to pay $155 million to monetize its existing future royalty obligations under its current Authorized Training Provider (ATP) agreement with Bombardier. This also involves the extension of CAE's ATP agreement to 2038. The monetization represents the discounted sum of royalties payable by CAE over the next 20 years; this transaction is expected to close by the end of CAE's current fiscal year.
"CAE is the largest independent civil aviation training company in the world, and we are proud to support the many business aircraft operators, airlines, and aircraft manufacturers who rely on CAE as their partner of choice for the most comprehensive and innovative training solutions," said Marc Parent, CAE President and CEO. "This transaction represents a win-win for both companies, resulting in enhanced core focus. We look forward to having increased addressability in the large market of Bombardier business jet operators, and to providing customers with a world-class training experience. Market fundamentals in business aviation are strong and the business we are acquiring is well supported by a large installed base. We are expanding our position in the largest and fastest-growing segment of business aviation training at an opportune time."
The BAT business is to be integrated with CAE, as its operations are already co-located within CAE's Dallas and Montreal training centers.
With the agreement, CAE would be adding 12 Bombardier business aviation full-flight simulators to its training network (including one deployment already planned), for a total of 29 business aviation simulators available for training worldwide. CAE operates more than 80 business aviation full-flight simulators in its training network.
CAE plans to finance the acquisition with a combination of cash on hand, drawing on its existing bank facility, and new committed term loans.