AAR to buy majority stake in aircraft maintenance firm MRO Holdings for $1.8 billion

Sept 28 (Reuters) - Aviation aftermarket services provider AAR AIR.N said on Monday it would acquire a 65% controlling interest in aircraft maintenance company MRO Holdings for about $1.8 billion.

The deal would strengthen AAR's maintenance, repair and overhaul footprint and increase capacity as airlines ramp up demand for aircraft servicing in the face of supply-chain constraints and delays in new jet deliveries. Its shares were up 6% in extended trading.

"Through the acquisition of MRO Holdings, we will create the largest heavy maintenance MRO (maintenance, repair, and overhaul) in the world, servicing a combined total of nearly 3,000 aircraft per year in our hangars," said John Holmes, CEO of AAR.

MRO Holdings operates aircraft maintenance and modification facilities across the United States, Mexico, El Salvador and Colombia, with about 90% of its revenue coming from sales to US customers. The company is backed by investors including private-equity firm Bain Capital.

AAR will have the option to buy the remaining 35% ownership interest of MRO Holdings within six years of the deal's closing.

The Wall Street Journal first reported about the deal earlier on Monday, citing people familiar with the matter.

AAR expects to fund the transaction through new debt, about $780 million of equity issued to existing MRO Holdings shareholders, and proceeds from a private investment in public equity (PIPE) offering.

The transaction is expected to close in AAR's fiscal third quarter ending February 2027, subject to regulatory approvals and other customary closing conditions.