New China Trust Co in largest acquisition of US company

In the largest Chinese acquisition of an American company, a mainland consortium has offered to buy most of the world's biggest aircraft leasing company, International Lease Finance Corporation (ILFC). ILFC's parent, American International Group (AIG), is selling its stake to raise cash to repay US bailout money.

The consortium - led by Weng Xianding, chairman of New China Trust, a Chongqing-based trust company that is 19.5 per cent owned by Barclays Bank - signed the agreement with AIG yesterday, agreeing to buy 80.1 per cent of the company for US$4.23 billion. It has the option of increasing its stake by another 9.9 per cent.

The consortium also comprises China Aviation Industrial Fund, ICBC International, the brokerage arm of the mainland's largest bank, and P3 Investment. Once the government clears the takeover and the option to increase the stake to 90 per cent stake is exercised, New China Life Insurance and ICBC International will step in as well.

When the deal closes, the Chinese investors could get hold of more than 1,000 owned or leased aircraft and a customer network of 200 airlines in 80 countries. It's expected to be completed in the second quarter of next year, provided all regulatory approvals from both the US and China are obtained in time.

AIG, which on Friday said it was in talks with Chinese buyers to sell a business, said it would submit the offer for review by the US Committee on Foreign Investment, or CFIUS, which vets foreign deals for security concerns.

"This deal allows ILFC to continue to serve its worldwide partners in the aviation industry with world-class service while accelerating its growth in important markets, including Asia," Weng said.