Confirming the rumored sale of its aircraft leasing business, today AIG (NYSE:AIG) announced it has agreed to sell International Lease Finance Corporation (ILFC) to AerCap Holdings N.V. (NYSE:AER) in a cash-and-stock deal valued at $5.4 billion.
The transaction is anticipated to close in the second quarter of next year, and AIG will receive $3 billion in cash and 98 million shares of newly issued AerCap stock. Based on the $24.93-per-share closing price of AerCap's stock on Dec. 13, the deal is valued at $5.4 billion. AIG also announced that it terminated its prior agreement with Jumbo Acquisition Limited, which was a Chinese consortium of investors that had agreed to purchase up to 90% of the common stock of ILFC. However in May the group failed to make a required deposit payment which allowed AIG to explore other sale avenues.
AerCap is headquartered in the Netherlands, but has offices in Ireland, the U.S., China, Singapore, and the UAE. ILFC is currently the largest independent aircraft lessor, according to AIG, and owns almost 1,000 aircraft and has commitments to purchase an additional 330 new fuel-efficient models.
"This transaction creates a strong foundation for ILFC and positions it for continued market leadership and strategic growth," said AIG's President and CEO, Robert Benmosche. "ILFC is a valuable business, and AIG has always taken great pride in ILFC's reputation for innovation, its pioneering role in aircraft leasing, its industry-leading team of employees, and its consistent and successful market leadership."
AIG also maintained that while it thinks ILFC is an attractive and valuable business, it is part of its non-core assets, and it sold the unit in an effort to better allow it to focus on its core insurance operations.
The transaction needs approval from AerCap shareholders. AIG said the deal marks "the last major disposition of AIG’s non-core assets."
"AerCap's acquisition of ILFC will create the leading global franchise in the aircraft leasing industry," said AerCap CEO Aengus Kelly in the press release. "This transaction presents a unique strategic opportunity to bring together the outstanding and experienced personnel from both companies and two attractive portfolios of modern aircraft on lease to a highly diversified customer base."
linkAerCap said the deal includes the assumption of outstanding ILFC net debt of $21 billion and allows AIG to nominate two directors for election to the AerCap Board of Directors. AIG will end up owning approximately 46% of the company.
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