(Bloomberg) — General Electric Co. is nearing an agreement to combine its jet-leasing business with Ireland’s AerCap Holdings NV, said people familiar with the matter, in a potential deal that would join the world’s two biggest aircraft financiers in a market roiled by the coronavirus pandemic.
A transaction may be announced as soon as Monday, said one of the people, who both asked not to be named discussing the matter. The deal is expected to have a value of more than $30 billion, said the Wall Street Journal, which reported the talks earlier Sunday. Between them, GE Capital Aviation Services, or Gecas, and AerCap have almost 3,000 aircraft owned, managed or on order.
A combination would speed GE Chief Executive Officer Larry Culp’s push to streamline the U.S. industrial icon after an epic corporate meltdown. While terms of the potential agreement with AerCap are unclear, a sale of Gecas could garner GE about $25 billion, Bloomberg Intelligence said in a report in 2019. Last year, GE completed the sale of its bio-pharmaceutical business to Culp’s former employer, Danaher Corp., for $21.4 billion.
“The old world where you needed a leasing a company to support your manufacturing is gone,” Bloomberg Intelligence analyst George Ferguson said in an interview. “For AerCap, this could be something that’s too good to refuse.”
GE declined to comment, and AerCap representatives couldn’t immediately be reached for comment outside regular business hours on Sunday.
Aviation Pain
AerCap, based in Dublin and listed on the New York Stock Exchange, has a market value of $6.6 billion. The shares advanced 11% this year through March 5 after a 26% drop last year. GE has jumped 26% this year following a 3.2% decline in 2020.
The pandemic has hammered the aviation industry and pushed airlines around the world to cancel new jetliner orders, push back delivery dates and defer lease payments. But a combination would be likely to receive scrutiny from antitrust authorities, other regulators and business partners, given the weight of the two companies in global aircraft finance.
For GE, a tie-up would extend a shift away from the company’s longtime business model of using its powerful leasing platform to generate sales of commercial aircraft powered by the company’s jet engines. GE’s finance arm has been significantly pared back since it nearly crippled the company during the 2008 financial crisis.
Culp has been shedding assets in recent years as part of his broader turnaround effort at GE after a collapse that wiped out a total of more than $200 billion in market value during 2017 and 2018. Under his leadership, the Gecas portfolio has been left in something akin to “caretaker status,” Ferguson said.
Asset Sales
In 2019, GE agreed to sell an aircraft-financing business for $3.6 billion to Apollo Global Management and Athene Holding…
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