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Dubai Aerospace to Buy Carlyle Aircraft Service Units for $1.8 Billion

Dubai Aerospace Enterprise said Monday it will buy two companies that service aircraft, Standard Aero Holdings and Landmark Aviation, from private-equity firm Carlyle Group for $1.8 billion.

Tempe, Arizona-based Landmark is an aircraft-maintenance company, and Winnipeg, Manitoba-based Standard Aero Holdings overhauls engines and turbines used in small-jet aviation and a small number of military transports.

While these are standard maintenance operations, involvement of a Dubai-based company raises sensitive political issues in the U.S.. Last summer, port operator Dubai Ports World was deluged by federal government and popular outcry against its plan to buy a set of U.S.-based shipping facilities. Since then Congress has begun to rewrite the rules for foreign investment in the U.S.. The changes come as ever more capital flows from the Arab world to business opportunities in the United States and Europe.

The filing said the acquisition of Washington-based Carlyle's aviation businesses is subject to federal government approvals, including the Committee on Foreign Investments in the United States.

Standard Aero, Landmark and DAE have provided an informational briefing to CFIUS and are expected to make a formal filing shortly.

According to a filing with the Securities and Exchange Commission, $1.034 billion of the acquisition price will be allocated to the purchase of Standard Aero.

In a media interview last week, DAE Chief Executive Bob Johnson said the company is already drawing up plans to dispose of parts of the companies to meet U.S. foreign ownership rules on certain assets.

Johnson said that even before the sale of those assets, DAE approached U.S.-based managers to run them between the time they are bought by DAE and when they are sold.

The transaction is expected to close during the third quarter of this year.

DAE is part of a drive to broaden Dubai's economy by building a collection of global businesses around aircraft finance, manufacturing and engineering. The company has investment backing from some of the region's biggest investors including investment fund Isthimar, property developer Emaar, and publicly listed Islamic financing group Amlak Finance.

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