China's Bohai Leasing to buy Avolon for $2.64 billion

Traders gather for the IPO of Avolon Holdings Ltd. on the floor of the New York Stock Exchange December 12, 2014. [Photo/Agencies]

China's Bohai Leasing Co Ltd is in exclusive talks to buy Irish aircraft leasing firm Avolon Holdings Ltd for $2.64 billion, after raising its offer to put it ahead of a rival bidder.

The deal, which gives Avolon a total enterprise value of $7.6 billion, would give Bohai 100 percent ownership of the world's 11th-largest aircraft lessor.

The $32 per share offer was $1 per share higher than Bohai's earlier approach in July and represents a premium of 11.3 percent to Avolon's Friday close of $28.76. It is also $2 per share higher than an offer from a rival unidentified suitor.

Bohai and Avolon now have until Sept 7 to negotiate a deal.

Chinese lessors, mostly backed by state-owned banks, have been expanding in recent years as large carriers such as Hainan Airlines Co Ltd, Air China Ltd, China Eastern Airlines Corp Ltd and China Southern Airlines Co Ltd open more routes at home and overseas.

Bohai, a unit of aviation and shipping conglomerate HNA Group, bid for all of Avolon after learning there was another bidder, having originally offered to buy 20 percent of the company for $429 million at $26 per share.

Avolon, which was founded by leasing entrepreneurs Domhnal Slattery and John Higgins in 2010, was floated last December. It owned or managed 152 aircraft at the end of June and had more than 100 more on order.

Ahead of Avolon's flotation, China Investment Corp (CIC) and AVIC Capital Co Ltd had been in talks to acquire the company.

The offer includes a break fee of up to $250 million in the event that the deal does not go ahead under certain circumstances, with an initial $75 million deposited by Bohai as a "good faith" measure.