Saturday 24 March 2018

Avolon chiefs could be in line for €57m sale bonanza

Aviation entrepreneur Domhnal Slattery.
Aviation entrepreneur Domhnal Slattery.
John Mulligan

John Mulligan

Clare entrepreneur Domhnal Slattery and the other co-founders of Dublin-based aircraft-leasing firm Avolon could be in line to split a $63m (€57m) windfall after the firm was targeted in separate takeover offers valuing it at up to $2.55bn (€2.3bn).

China's Bohai Leasing, majority-controlled by the Chinese state-owned HNA Group, has offered to buy Avolon for $31 a share after an unnamed suitor offered $30 a share.

Mr Slattery co-founded Avolon in 2010 with chief financial officer Andy Cronin and chief commercial officer John Higgins.

They secured more than $7bn in backing from private equity firms and banks, including Cinven and CVC, and Oak Hill Capital Partners.

Avolon floated on the New York Stock Exchange last December at $20 a share, in what was a record debut for an Irish company on the exchange.

Mr Slattery, who made millions of euro when he sold another Irish aircraft-leasing business to Royal Bank of Scotland in 2001, owns 1.36pc, or 1.1m shares of Avolon, according to March filings with the US Securities and Exchange Commission.

Mr Higgins owns 479,297 shares in Avolon, while Mr Cronin owns 222,041. Chief operating officer Tom Ashe owns 225,135 shares.

The highest current indicative takeover offer now values Mr Slattery's stake at $34.3m (€31m).

Mr Cronin's is valued at $6.8m (€6.1m), and Mr Higgins' at $14.8m (€13.4m). Mr Ashe's stake is valued at $7m (€6.3m). Earlier this month, Avolon agreed to sell a 20pc stake in the company to Bohai Leasing for $429m. Bohai had agreed to pay $26 per share.

But just as the deal was close to being consummated, Avolon received an unsolicited offer from a suitor it didn't name, to buy the Irish firm for $30 a share.

"Avolon informed Bohai of the unsolicited offer," said Avolon in a statement.

"After Avolon informed Bohai of this offer, Bohai submitted a non-binding offer to acquire 100pc of the issued and outstanding common shares of Avolon at a price of $31 per share."

The value placed on Avolon based on Bohai's offer represents a 55pc increase over the Irish company's valuation when it floated on the New York Stock Exchange last December.

"Avolon's board of directors has not accepted or rejected either offer and continues to carefully evaluate these offers with its financial and legal advisers and has authorised its financial advisers to continue negotiations with both offerors regarding their respective offers," the aircraft-leasing firm said.

It's possible that other suitors could now emerge for Avolon, or that Bohai and the other current contender will raise their indicative bids for the leasing firm.

Avolon has a fleet of 153 owned and managed aircraft, with another 107 on order from Boeing and Airbus.

Its airline clients include China Airlines, AeroMexico, KLM and Japan Airlines.

Irish Independent

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