Shares in plane leasing company Avation (AVAP) have jumped 7.6% higher to 290p as it revealed it is considering plans to put itself up for sale.
The firm has announced it is undertaking a comprehensive review of the business, and will consider a number of strategic options as it looks to ‘maximise value for shareholders’.
Such options include potential M&A activity, an aircraft portfolio sale, and the potential sale of the company through a formal sale process.
The firm also disclosed that, at the time of the announcement today, it is in preliminary discussions with one interested party about a potential takeover of the company.
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Analysis from research firm Davy has found that acquisitions within the leasing sector usually take place when a company has a price to book value between 0.8 and 1.4 times, depending on its growth prospects.
Avation has a price to book value of 0.9 times according to Stockopedia.
A small aircraft lessor with a £169m market cap, analysts at Davy said Avation has ‘quickly and profitably built an attractive fleet of young aircraft’.
They added, ‘The investment case, where further scaling would provide commercial and financing benefits, was not fairly reflected by valuation levels, in our view.
‘The commencement of a formal sale process is a step towards correcting this and we note that M&A in the space has historically happened above book value.’
