HNA Group’s Bohai Leasing has acquired Irish aircraft lessors Avolon Holdings in a landmark deal valued at US$7.6 billion as mainland aircraft lessors try to become globally competitive through big ticket acquisitions.
Bohai has agreed to spend about US$2.5 billion to acquire the New York-listed lessor at a price of US$31 per share, US$1 lower than its August bidding price, the companies said in a statement on Thursday.
Avolon said the price reflected “significant volatility across global equity markets”, though it is still at an 8 per cent premium over its Thursday closing price and 55 per cent higher than its initial public offering price last December.
The deal with a total enterprise value of US$7.6 billion is expected to close by the first quarter of next year, Avolon said. It marks another major purchase by HNA, the Hainan airline parent on a global spending spree who just spent US$2.77 billion to acquire one of the world’s largest air cargo handlers in Swissport last July.
Bohai’s takeover of Avolon, which would put it alongside the bank-backed BOC Aviation and ICBC Leasing as the three Chinese names in the world’s top 10 aircraft leasing firms, comes out of a string of pursuits of international lessors from China, which is relatively new to a deep pocket business previously dominated by Western players like Europe’s AerCap and the US’s Gecas.
Aviation consultancy Flightglobal’s Asia finance editor Ellis Taylor said, “Mainland lessors have been pushing themselves onto the global stage for a long time. We had the Chinese bid for ILFC in 2012 and Avic’s bid for Avolon last year,” referring to a failed bid by a Chinese consortium for the world’s largest aircraft lessor owned by American Insurance Group then before it was eventually sold to AerCap in 2013 for a bargain price of US$5.4 billion.