VSE subsidiary VSE Aviation has acquired 1st Choice Aerospace, two privately owned aviation supply chain management companies.

The initial acquisition price paid at closing is $112m in cash. The deal agreement also consists of potential post-closing payments of up to $40m when 1st Choice crosses some performance thresholds during 2019 and 2020.

With operations in Florida and Kentucky, 1st Choice Aerospace offers component maintenance, repair and overhaul (MRO) services and products for new generation and legacy commercial aircraft families.

1st Choice Aerospace provides pneumatics, fuel, electromechanical, electrical accessories, crew seats, interiors, lavatory systems, oxygen systems, cargo systems, and containers.

“1st Choice has built a highly regarded business with a proven record of superior operational performance delivered by an excellent team.”

It had revenues of $29m in 2017 and estimated revenues of $47m in 2018 with robust operating margins.

VSE Aviation has retained the senior management team through employment contracts to continue management of 1st Choice operations and its 200 employees.

VSE CEO and president Maurice ‘Mo’ Gauthier said: “We are pleased to add 1st Choice’s service offerings to our supply chain and MRO portfolio. We see opportunities to strategically align 1st Choice’s offerings with our existing domestic and international markets, including our recent Singapore and European initiatives.

Should Boeing be bailed out?

View Results

Loading ... Loading ...

“1st Choice has built a highly regarded business with a proven record of superior operational performance delivered by an excellent team.”

VSE Aviation president Paul Goffredi said: “We believe that our acquisition of 1st Choice will significantly broaden our client base and further extend our thrust into the commercial aerospace supply chain market.

“Their quality work, quick turnaround times, excellent customer service, aptitude for adding new capabilities, and opportunistic and entrepreneurial approach make them an attractive addition to our team. 1st Choice’s growth potential and profit margins offer us a compelling opportunity to add value to our operating portfolio. We anticipate operational synergies with respect to customers, product lines, supply lines, and technical expertise.”

1st Choice senior officer and shareholder Mario Catalano said: “We look forward to joining the VSE team while we retain our strong brand.

“This combination provides us with the strategic support and capital backing required to better serve our customer base and optimize our growth strategy, and we believe it will be mutually beneficial to VSE Aviation and 1st Choice.”

Set up in 2015 by VSE Aviation is a family of companies that includes Air Parts & Supply Co, CT Aerospace, Kansas Aviation of Independence and others that specialise in MRO services and parts supply for commercial, corporate and regional aircraft.

VSE funded the deal with its existing revolving loan offered by its lending group led by Citizens Bank.

VSE secured financial advisory services for the deal from Citizens Capital Markets and SunTrust Robinson Humphrey.

It received industry and market due diligence support from Oliver Wyman CAVOK.

Legal advice for the acquisition was secured by VSE from Washington, DC-based Arent Fox.

1st Choice got M&A advisory services from Chicago-based XLS Partners and legal services from Florida-based Gunster.