China's HNA Group to Buy Avolon for $31 a Share
September 03 2015 - 11:15PM
Dow Jones News
By Doug Cameron And Maria Armental
China's HNA Group on Thursday agreed to buy aircraft lessor
Avolon Holdings Ltd. for about $2.6 billion, outbidding a
state-owned suitor and highlighting the country's continuing thirst
for new passenger jets.
The agreed deal, with an enterprise value of $7.6 billion,
follows a rare yearlong skirmish among Chinese firms for one of the
largest jet lessors at a time when airlines increasingly opt to
rent rather than buy jets to conserve cash, and Chinese carriers
prepare for a binge of new orders.
HNA's Bohai Leasing unit agreed to pay $31 in cash for each
Avolon share, two months after a plan to acquire a minority stake
triggered a rival takeover offer from state-controlled Avic Capital
Co., which last year tried to buy the Ireland-based company.
Avolon owns and manages 259 jets, and with China set to overtake
the U.S. as the world's largest domestic aviation market, companies
including Bank of China and Industrial & Commercial Bank of
China have bought aircraft lessors or financed more jet deals to
expand their exposure to the sector.
Domhnal Slattery, Avolon's founder, will remain with the
company, alongside other senior executives.
Chinese carriers are forecast to order around 6,330 jets over
the next two decades worth nearly a trillion dollars at list
prices, according to the latest from Boeing Co.
Mr. Slattery is part of a small cadre of Irish-born executives
who dominate the jet-rental business, a legacy of the country's
favorable tax treatment of the sector and the early leadership role
of Guinness Peat Aviation, whose main assets were bought by General
Electric Co., and AerCap Holdings NV, which bought the aircraft
leasing unit of American International Group Inc. GE and AerCap
dominate the industry, with fleets of more than 1,000 jets.
Avolon, launched in May 2010 with private-equity backing, went
public in December for $20 a share
In July, Bohai had agreed to pay $429 million, or $26 a share,
for a 20% stake in the Dublin-based company. It raised its offer
last month to $31 a share after another bidder emerged.
On Thursday, Avolon said the price of $31 a share "reflects
significant volatility across global equity markets."
The aircraft lessor listed on the New York Stock Exchange this
past December following the collapse of takeover talks with
potential buyers in Asia.
Private-equity-controlled Avolon has commitments for more than
100 planes. Bohai had previously committed to acquire the Avolon
shares for $26 each, a 14.5% premium to its average share price at
the time.
Write to Doug Cameron at doug.cameron@wsj.com and Maria Armental
at maria.armental@wsj.com
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(END) Dow Jones Newswires
September 03, 2015 23:00 ET (03:00 GMT)
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