The acquisition to create a combined company with 37 billion euros ($38.45 billion) in assets comes six months after Ireland’s AerCap Holdings NV cemented its position as the world’s largest aircraft lessor through its takeover of General Electric’s leasing business.
SMBC, which is part of a consortium including Japanese companies Sumitomo Corp and Sumitomo Mitsui Financial Group, said it would take over a portfolio of 176 owned and operated aircraft to bring its total fleet to 709 aircraft.
With 261 additional Boeing and Airbus aircraft on order, SMBC’s fleet will exceed the 832 aircraft that Dublin-headquartered Avolon owns, operates or has on order.
Reuters reported on Friday that SMBC and Goshawk were close to a deal which could be announced as early as this week.
“We are entering into this transaction at a strategic time in the cycle, with a strong recovery in the global airline industry, and expect the transaction to be accretive to SMBC Aviation Capital’s return on capital,” said Peter Barrett, Chief Executive Officer. of SMBC, in a press release.
SMBC will finance the transaction through a combination of debt and equity. Young narrow-body aircraft, which it hopes will drive its growth, will make up more than 82% of the combined fleet, it added.
The six aircraft belonging to Goshawk which are located in Russia and subject to EU sanctions are excluded from the transaction.
Goshawk, headquartered in Dublin, is an equal joint venture between Hong Kong conglomerate NWS Holdings Ltd and Chow Tai Fook Enterprises Ltd. It was created less than ten years ago and its shareholders said it was selling for an attractive value.
Last year’s $30 billion acquisition of AerCap was expected to spur further consolidation in an industry that funds more than half of the world’s passenger jet production, in transactions representing approximately $150 billion worth of aircraft each year.
($1 = 0.9624 euro) (Reporting by Padraic Halpin Dublin and Aishwarya Nair Bengaluru; Editing by Vinay Dwivedi, Matthew Lewis and David Evans)