Business Irish

Friday 19 September 2014

Chinese bid for Avolon confirmed but €12bn value denied

Published 16/08/2014 | 02:30

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Boeing 737
Boeing 737

China's state-owned investment firm, Aviation Industry Corporation of China (AVIC), has confirmed it is in talks to buy Dublin-based Avolon but denied a deal would be for €12bn.

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A takeover would end the Irish aircraft leasing group's plans to float on the New York Stock Exchange later this year.

However, regardless of the talks, Avolon, which was founded by former GPA Aviation executive Domhnal Slattery, is pushing ahead with the planned stock market listing.

AVIC confirmed that it is in talks to buy Avolon on Friday, following media reports that a deal was in the works. But the Chinese firm denied a report in a Chinese newspaper that put the value of the transaction at around €12bn. It did not say what the price could be.

Deal

"The size of the deal mentioned by the newspaper report is not accurate," the statement said.

Sources cited by Reuters suggested a price of $4bn (€2.98bn) to $5bn (€3.7bn) for the Irish company, including an estimated equity value of around $2.5bn (€1.87bn).

AVIC said it has been, and remains in, talks with relevant parties on the acquisition of Avolon and conducted initial due diligence, in a statement filed to the Shanghai Stock Exchange website.

"There is still uncertainty that a deal can be completed," the statement said.

According to initial papers filed in the US the Avolon flotation is intended to raise $100m - though that is seen as a place holder figure by industry figures who anticipate that a multiple of that amount would be raised in any deal.

Avolon is backed by private equity firms Cinven, CVC Capital Partners Ltd and Oak Hill Capital Partners, as well as Singapore's sovereign wealth fund.

The global business is led from Dublin by its mainly Irish management team. Earlier this month it emerged that Asia's richest man Li Ka Shing was lining up a bid of as much as $5bn (€3.8bn) for about 100 aircraft owned by another Dublin aircraft leasing firm, Awas.

Awas is owned by private equity firm Terra Firma.

Earlier this year Mr Li's telecoms giant Hutchison Whampoa, which owns the 3 brand, bought O2 Ireland for some €850m.

Irish Independent

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