Monday 23 April 2018

Dublin-based Avolon to be a $40bn business after takeover

Avolon co-founder Domhnal Slattery.
Avolon co-founder Domhnal Slattery.
John Mulligan

John Mulligan

Dublin-based Avolon is set to become a $40bn (€36bn) business and one of the top three jet-leasing companies in the world after China's Bohai Leasing agreed to pay $7.6bn for the lessor.

Sources said the scale of the expansion would see Avolon eventually grow to more than five times its current size.

It's currently about the ninth biggest jet-leasing company in the world.

Almost all of the world's biggest such companies have offices or headquarters in Ireland, including AerCap, the largest firm in the sector.

Avolon co-founder Domhnal Slattery, inset, declined to comment on the expansion plans, but confirmed to the Irish Independent that senior management and other co-founders remain committed to the company for the long term following the sale.

Mr Slattery said that Avolon would become a "significantly bigger" business under its new owners.

Bohai Leasing is majority controlled by China's state-owned HNA Group, a huge conglomerate with interests around the world ranging from commercial property, aviation and shipping, to banking.

Bohai has agreed to pay $31 a share for Avolon, which was only founded 2010 and floated on the New York Stock Exchange last December at $20 a share.

Bohai had expected to pay $32 per share, but the figure was reduced to $31 to reflect "significant volatility" across global equity markets, according to Avolon.

The $7.6bn enterprise value placed on Avolon includes about $5bn of debt being assumed by Bohai, and the remainder is equity.

The Chinese firm had originally signalled its intention to buy a 20pc stake in Avolon, but a takeover offer by another suitor for Avolon prompted it to make a move for the entire company. That rival takeover approach had been made by another Chinese company.

Bohai now expects to complete its acquisition of Avolon in the first quarter of 2016.

Avolon was co-founded in 2010 by Mr Slattery, Avolon's chief financial officer Andy Cronin, and chief commercial officer John Higgins.

They'll split about $63m (€57m) as a result of the takeover by selling shares they own in the business.

Mr Slattery, who made millions when he sold another Irish aircraft-leasing business to Royal Bank of Scotland in 2001, will receive about €31m of that.

Avolon was backed to the tune of more than $7bn by private equity firms Oak Hill Capital partners, Cinven and CVC. Singapore's sovereign wealth fund also invested in the leasing company.

Between them, the private equity backers own about 75pc of Avolon.

Bohai has already paid a $75m deposit for Avolon, and will pay another $200m yesterday. It will pay a further $75m on September 15. That $450m is payable to Avolon in certain circumstances if the acquisition is not completed.

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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