DAE interested in acquiring U.S. defence companies
DPW waded into a firestorm last year when it acquired management rights in major U.S. seaports; now DAE is risking a similar firestorm as it tries to buy into the U.S. aircraft maintenance and service sector
What do they say about being once burnt, twice shy? We may need to reconsider this. Undaunted by the firestorm which accompanied the Dubai Ports World’s plan last year to acquire controlling stake in the management of major U.S. seaports, the Dubai’s ruling family is now set to acquire a number of aerospace and defence businesses in the United States in a deal valued at more than $1.5 billion. The Financial Times reports that Dubai Aerospace Enterprise (DAE), aiming to create a $15 billion aerospace and aviation services company, has been talking with with private equity giant Carlyle about acquiring part of Tempe, Arizona-based Landmark Aviation and Winnipeg, Manitoba, Canada-based Standard Aero, two companies which provide engine repair and overhaul aviation services.
DAE is chaired by Sheikh Ahmed bin Saeed Al Maktoum, chairman of the Emirates airline group and president of the Dubai department of civil aviation.
In September 2006 DAE joined with Abu Dhabi to pay $1,334 million to acquire Zurich-based SR Technics, the world’s leading independent provider of aircraft MRO services.
DAE and Carlyle will likely ask for a full 90-day review by the Committee on Foreign Investment in the United States (CFIUS). The parties are likely to agree to tough conditions to win approval for the deal, such as those imposed on the Alcatel-Lucent merger, including an “evergreen” clause which would allow the government to unravel the transaction at any time in the future if the companies fail to comply with an agreed security arrangement. This may not be enough, though, as there are already voices in Congress calling for extra care in examinning the deal. Senator Chuck Schumer (D-New York) said: “This purchase is not as much of a security risk as Dubai Ports World, but because it deals with maintenance of aircraft, it certainly raises security questions.”
What does not help is the fact that the UAE has been undernmining the U.S. and European efforts to squeeze Iran economically: UAE businesses have been actively transferring prohibted technologies and goods to Iran, thus complicating the efforts to modify Iran’s behviour on nuclear issues and terrorism.
