Carlyle Group Bids On Arinc, US Aviation & Defense Deal at $1 Billion

Another private equity deal has been announced this week, as Carlyle Group was rumored to make a bid for an aviation and defense business in North America.

According to Mr. Mider and Mr. Kelly of Bloomberg, “Carlyle Group, the world’s second- largest private-equity firm, hired Goldman Sachs Group Inc. to seek buyers for its Arinc Inc. defense and aviation business, said people with knowledge of the matter.

Arinc may fetch about $1 billion and attract bids from other private-equity firms, said the people, who declined to be identified because the plan hasn’t been announced. The Annapolis, Maryland-based firm consults with the military and designs systems that help airline pilots communicate with the ground.

Private-equity firms, largely unable to buy companies or sell what they already own for more than two years, are beginning to make deals and reap profits from previous purchases. Carlyle and competitors Blackstone Group LP and KKR & Co. have distributed gains to their investors after pursuing sales and initial public offerings.

Spokesmen for Carlyle and Goldman declined to comment.

Carlyle, based in Washington, ranks behind New York-based Blackstone in size. Created in 1987 by William Conway, Daniel D’Aniello and David Rubenstein, the firm has $87.9 billion under management and runs 65 funds around the world.

Arinc, founded in 1929, helped develop systems used by aircraft to communicate with air-traffic controllers. Owned by six U.S. airlines including AMR Corp. and UAL Corp., it was sold to Carlyle for an undisclosed sum in October 2007.

The investment was made by Carlyle Partners IV LP, the firm’s fourth U.S. buyout fund, which was launched in 2005 and has $7.8 billion of equity commitments, according to Carlyle’s Web site. Carlyle Mezzanine Partners II, a $554 million fund, also is an investor.

Arinc had more than $1 billion of revenue last year and about 3,100 employees.

Rubenstein, 60, said in a Feb. 18 interview that an IPO market that’s been unfriendly to private-equity firms won’t prevent Carlyle and its rivals from exiting investments, as other buyout managers and companies remain willing buyers.”

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