Posted on: 07 October 2016 by Mark Howells
Avolon Holdings, a wholly owned subsidiary of Bohai Capital Holding, has agreed to acquire the aircraft leasing business of CIT Group, which will create a business with an owned, managed and committed fleet of 910 aircraft valued at over $43 billion.
The Transaction is subject to closing conditions and required regulatory approvals and is expected to close in the first quarter of 2017.
The rationale given by Avolon for the move is that it will double the scale of the Avolon business and create the world’s third largest aircraft leasing platform. The combined business will also have approximately one third of in-service aircraft leased into each of the Americas, EMEA and Asia-Pacific regions, providing balanced geographic exposure plus an attractive pipeline of future deliveries for 282 new technology aircraft to underpin growth objectives.
In acquiring CIT Group’s aircraft leasing business, Avolon will take on 334 owned and managed aircraft; plus 133 aircraft on order or committed. It will acquire total assets as of 30 June 2016 of $11.1 billion and associated liabilities.
Avolon will pay $10.0 billion for $9.4 billion of net asset value (NAV) as of 30 June 2016, which represents a premium of 6.7%. As mentioned, the combined owned, managed and committed fleet comprises 910 aircraft valued at over $43 billion. The combined orders and commitments of 349 aircraft comprise 195 Airbus aircraft (A320neo family, A330neo and A350); 59 Boeing 737 MAXs and 28 Boeing 787s.
“From a standing start we will have built Avolon into a leading global player in six years,” declared Avolon CEO, Dómhnal Slattery. “We are delighted to acquire the CIT aircraft leasing platform. It is a strong business with an excellent reputation in the market. While this transaction is strategically compelling and will double the scale of Avolon, it is not the summit of our ambition. Avolon has a strong brand, a best-in-class fleet, a proven business model and a long-term strategic shareholder committed to the sector. We look forward to continuing to drive the disciplined growth of the business in the years ahead.”
As well as being subject to customary closing conditions and regulatory approvals, the transaction is subject to Bohai shareholder approval. HNA Group, Bohai’s largest shareholder, has agreed to vote its shareholding in Bohai in favour of the transaction.