Clayton Dubilier’s Aerospace Buyout Takes Off –

In its largest equity investment ever, private investment firm Clayton, Dubilier & Rice in collaboration with Allianz Capital Partners, an affiliation of global insurer Allianz Group, this month closed its acquisition of Fairchild Aerospace Corp., the parent company of Dornier Luftfahrt GmbH.

Fairchild/Dornier designs and manufactures business jets, corporate shuttles and airliners with under 100 seats.

The deal was valued at approximately $1.2 billion. Clayton Dubilier invested $300 million from CD&R Fund VI and now owns 75% of Fairchild/Dornier, based in Oberpfaffen, Germany, near Munich. Allianz invested $100 million and has a 15% stake in the company.

A consortium of German banks and institutions provided the remaining debt of almost $800 million. Management and the Dornier family retained a 10% stake.

Fairchild/Dornier plans to use its profits from the transaction to develop a family of 50- to 105-seat airliners, the 728JET family.

“With our commitment to provide ongoing management and strategic resources, coupled with the strong support of our co-investor, Allianz Capital Partners, Fairchild/Dornier will be well positioned to execute its long-term growth strategy,” Joseph Rice, chairman of CD&R, said in a statement.

In a previous interview CD&R principal Michael Babiarz said Fairchild/Dornier’s focus will continue to be on research and development. And while the firm does not expect to see profits in the near future, it does expect Fairchild/Dornier to be a $5 billion company by 2004 (BUYOUTS January 10, p. 1).

Fairchild/Dornier, which has facilities in Texas and Germany and offices in Washington, D.C., currently has over 400 aircraft on backorder with a value of more than $8 billion.

Fairchild/Dornier was previously owned by a group of investors, led by Carl Albert, former chairman and CEO, who will now act as a director of the company. Charles Pieper, former senior operating executive at General Electric Co., is now chairman of Fairchild/Dornier and a principal of CD&R.