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Air Lease accepts Sumitomo's $7.4 billion offer to buy out the group, backed by SMBC

A group of investors led Sumitomo Corp. and SMBC Aviation Capital announced on Tuesday they would purchase Air Lease Corp. for $7.4 billion in cash, in an attempt to create the largest aircraft leasing company worldwide.

The combined company will be able to compete with AerCap as the leading lessor of aircraft in the industry.

The combined company's headquarters will be in Dublin. This is the real global hub of the aircraft leasing industry. It finances over half of new passenger aircraft deliveries.

Air Lease will pay $65 for every Class A Common Share it holds. This is a 7.9% increase over the last closing price of the company.

Air Lease shares were up 6% or so in premarket trading.

The aircraft lessor will be valued at approximately $28,2 billion including debt.

The deal will combine Air Lease's global network with SMBC Aviation’s financial power, and expand Sumitomo’s aircraft leasing business by scale and profitability.

SMBC Aviation Capital was the second largest aircraft lessor in the world. It traded under RBS Aviation Capital until it was purchased by a Japanese consortium consisting of SMFG and Sumitomo Corp.

Steven Udvar Hazy, unofficial godfather of the industry, founded Air Lease Corp in 2010 after he had left ILFC. At the time, ILFC was the largest aircraft lessor in the world.

Hazy sold ILFC in 1990 to AIG, but continued running it until the global economic crisis, which impacted ILFC's borrowing and purchasing of aircraft.

Hazy stepped aside from Air Lease after an unsuccessful attempt to buy ILFC.

Citigroup, Goldman Sachs and J.P. Morgan Securities are advising SMBC Aviation Capital. (Reporting and editing by Shreya Biwas, Shinjini Gauli, Shreya Parmar and Anshuman Tripathy. Additional reporting and editing by Nathan Gomes and Padraic Humphries.

(source: Reuters)