Umeco in Talks to Sell Supply Chain Unit

British aerospace parts supplier Umeco Plc is in discussions to sell its supply chain unit, Pattonair, Reuters reported. Lloyds Development Capital, the private equity arm of Lloyds Banking Group, is in talks to acquire the business, Reuters said, citing a report in The Mail. A potential deal is estimated at 200 million pounds ($322.2 million), Reuters wrote.

(Reuters) – British aerospace parts supplier Umeco Plc said it is in discussions to sell its supply chain unit Pattonair, a major part of its business.

The company, which also makes composite materials for Formula One racing cars, confirmed on Monday it is in non-exclusive discussions which could lead to the sale of Pattonair.

British newspaper The Mail on Sunday reported that Pattonair had been put up for sale for more than 200 million pounds ($322.2 million) and that Umeco were in talks with Lloyds Banking Group’s private equity arm, Lloyds Development Capital.

Pattonair, whose customers include Rolls Royce, BAE Systems and the U.S. Department of Defense, had revenues of 235 million pounds in the year to March 2010, a substantial chunk of the 409 million pounds sales notched up by Umeco as a whole.

Analysts at UBS were sceptical of the reported sale price but said that they did believe Umeco wants to focus just on its composites business, which offers good long-term growth.

“This sort of valuation would be a ridiculously good price, such that we would be sceptical that Supply Chain could fetch this much,” UBS said on Monday.

“We had valued Supply Chain at just 134 million pounds in our sum-of-the-parts to derive our price target, although at the current share price the market would be pricing it in about 8 percent lower.”

Shares in Umeco rose 8 percent to 495 pence, valuing the company at around 238 million pounds.

(Reporting by Neil Maidment; editing by Rosalba O’Brien)