Bohai Leasing, a Chinese aviation and shipping corporation HNA Group unit, has reportedly acquired Avolon Holdings for $2.5 billion. Initially, Bohai had offered to buy 20 percent of Avolon for $26 per share in July. But the company had a change of mind and decided to purchase the entire company after learning about a rival bid.
Bohai's Avolon acquisition is expected to close by first quarter of 2016. According to Irish Independent, Avolon shareholders will receive $31 per share in cash, which is lower than the $32 per share exclusively discussed between the companied in August. The lower price is reportedly due to the "significant volatility across global equity markets."
The Avolon-Bohai deal, which included the assumption of debt, has amassed a total enterprise value of almost $7.6 billion. The acquisition came amid the expansion plans of Chinese lessors, most backed by state-owned banks in recent years. As per RTE, Chinese lessors have expanded by purchasing large carriers such as Hainan Airlines, Air China, China Eastern Airlines and China Southern Airlines, which have opened more routes at home and overseas.
Meanwhile, Avolon is an Irish aircraft leasing firm founded by leasing entrepreneurs Domhnal Slattery and John Higgins in 2010. It has owned or managed 152 aircrafts at the end of June and had over 100 more on order. The company went public last December.
The definitive merger agreement between Bohai Leasing and Avolon Holdings was announced on Sept 3.
"Avolon is an established leader in the global aircraft leasing industry and we are pleased to announce this agreement with Bohai," Avolon's Chairman Denis Nayden said, as per Market Watch. "Avolon has delivered significant returns for all shareholders and we believe Bohai are the right shareholder for the Avolon business in the next stage of growth."
"We believe Bohai will enhance Avolon's profile, positioning and relationships in the Chinese aviation market - a market which we believe offers one of the most compelling growth opportunities in global aviation over the next two decades," Nayden added.
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