The Carlyle Group has pulled ahead of its rivals in the race for FiatAvio. The US private equity group and Fiat signed a memorandum of understanding last week on the proposed takeover, citing Finmeccanica as an industrial partner in the bid for FiatAvio, Fiat's aero engine business. The agreement values FiatAvio at €1.6 billion ($1.7 billion) after debts - the final price will be determined following due diligence inspections, to be completed by mid-May.

The move puts Carlyle ahead of UK equity company Doughty Hanson, teamed with Piaggio, and of Snecma, which claims still to be interested despite the collapse of an earlier joint approach with Finmeccanica (Flight International, 1-7 April).

If it succeeds, Carlyle will acquire 70% of FiatAvio, while Finmeccanica will take the remaining 30%. The memorandum does not mention an option for Finmeccanica to sell its share to its co-bidder - Finmeccanica's insistence on such an option led to the collapse last month of its joint approach with Snecma.

Finmeccanica's top managers emphasise that they are mainly interested in FiatAvio's space business. Finmeccanica left the aircraft engine business when it sold Alfa Romeo Avio to Fiat in 1996.It entered the bidding for FiatAvio after its majority shareholder, the Italian government, called for continued Italian involvement in FiatAvio, a major armed forces supplier.

Source: Flight International