AIG Finds a Buyer for Aircraft Leasing Group

More than two years ago, American International Group Inc. (NYSE: AIG) filed with the U.S. Securities and Exchange Commission for an initial public offering (IPO) in its aircraft leasing group, International Lease Finance Corp. (ILFC). That filing came to nothing, and AIG found little interest from buyers for ILFC, until Monday morning when it announced that AerCap Holdings N.V. (NYSE: AER) will buy the leasing operation for $3 billion in cash and 97.56 million shares of new AerCap stock. The total value of the deal is approximately $5.4 billion.

In its announcement, AIG said that it had cancelled an agreement with Jumbo Acquisition Limited for a sale of up to 90% of ILFC. Another potential buyer had turned up last December, a consortium of Chinese financial service firms that had offered to pay $4.23 billion for about 80% of ILFC, but the deal was never completed.

When AIG filed for an ILFC IPO, the insurance company was expected to sell about 20% of the leasing unit, valuing ILFC at between $8 billion and $10 billion, according to a report in the Wall Street Journal. Proceeds would have gone to repaying the $68 billion in bailout funds AIG received following the financial crisis of 2008.

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The federal government’s remaining stake in AIG was sold last December, and the bailout deal showed a net positive return of nearly $23 billion to U.S. taxpayers.

AerCap’s largest shareholder, Abu Dhabi-based Waha Capital, has agreed to vote its 26% stake in favor of the acquisition. After the transaction closes, AIG will have the right to nominate two members of AerCap’s board, and AIG has agreed to provide a five-year $1 billion revolving credit facility to the combined company.

AerCap currently has about 113.72 million shares outstanding, and AIG will have a stake of about 46% in the combined company when the transaction closes.

AIG stock was up about 1.5% in premarket trading Monday, at $50.14 in a 52-week range of $34.22 to $53.33.

AerCap’s shares were trading up about 6.3% at $26.49, well above the 52-week range of $13.37 to $24.93.