DEFM14A: Air Lease Corp. to be Acquired for $65/Share in Cash

Air Lease Corporation stockholders are invited to a special meeting on December 18, 2025, to vote on a merger agreement where the company will be acquired for $65.00 per share in cash.

Summary

• Air Lease Corporation (AL) will be acquired by Sumisho Air Lease Corporation Designated Activity Company (Parent) for $65.00 per share in cash.
• Parent is a new holding company that will be jointly owned by Sumitomo Corporation, SMBC Aviation Capital Limited, and affiliates of Apollo Capital Management, L.P. and Brookfield Asset Management Ltd.
• The merger consideration of $65.00 per share represents a premium of approximately 7% over AL's all-time high closing stock price on August 28, 2025.
• The offer also represents a premium of approximately 14% over the volume weighted average share price during the 30 trading day period ended August 29, 2025, and 31% over the last 12 months trading day period ended August 29, 2025.
• The Air Lease Board unanimously recommends that stockholders vote FOR the merger proposal.
• Shares of Air Lease's Series B, Series C, and Series D Preferred Stock will remain outstanding with their existing rights, preferences, privileges, and voting powers.
• The merger is contingent upon stockholder approval and various regulatory approvals from over 20 jurisdictions, including the HSR Act and CFIUS.
• Parent has secured $5.4 billion in equity financing and $12.1 billion in debt financing (comprising an $8.6 billion bridge facility and a $3.5 billion revolving credit facility) to fund the acquisition.
• A stockholder lawsuit filed on October 30, 2025, alleging misrepresentation in the preliminary proxy statement, was voluntarily dismissed without prejudice on November 3, 2025.

Sentiment

Score: 8

Explanation: The unanimous board recommendation, significant premiums over historical stock prices, and secured financing indicate a strong positive outlook for Class A Common Stockholders receiving cash. While there are standard risks and potential delays, the overall tone and financial terms are highly favorable for the selling shareholders.

Positives

• The all-cash merger consideration of $65.00 per share provides certainty of value to Class A Common Stockholders and eliminates long-term business and execution risk.
• The offer price represents a significant premium of approximately 7% over the company's all-time high closing stock price on August 28, 2025.
• The premium is approximately 14% over the volume weighted average share price during the 30 trading day period ended August 29, 2025, and 31% over the last 12 months trading day period ended August 29, 2025.
• The Air Lease Board unanimously determined that the merger is fair to and in the best interests of the company and its stockholders, concluding it was more favorable than other available opportunities or remaining an independent public company.
• No other party made a more favorable proposal for a strategic transaction with the company after preliminary discussions with several third parties.
• The company is permitted to continue paying regular quarterly cash dividends of up to $0.22 per share of Class A Common Stock, $11.625 per share of Series B Preferred Stock, $10.3125 per share of Series C Preferred Stock, and $15.00 per share of Series D Preferred Stock.
• Appraisal rights are available to Class A Common Stockholders who do not vote in favor of the merger, allowing them to seek a fair value determination for their shares.
• The merger agreement terms are structured to be unlikely to deter third parties from making an unsolicited superior proposal, and the company retains the right to terminate for a superior proposal (subject to a termination fee).
• The Air Lease Board has the right to change its recommendation under certain circumstances, such as a superior proposal or an intervening event.
• Financing commitments for the acquisition are secured, and the merger is not conditioned on Parent's receipt of any financing.
• Limited Guarantees from Sumitomo Corporation and SMBC Aviation Capital Limited provide backing for Parent's monetary obligations under the merger agreement.
• The receipt of consents from Original Equipment Manufacturers (OEMs) for the Orderbook Transfer is not a condition to the closing of the merger.

Negatives

• If the merger is completed, Class A Common Stock will no longer be publicly traded and will be delisted from the New York Stock Exchange, eliminating future ownership interest for current Class A Common Stockholders.
• Class A Common Stockholders will no longer benefit from any potential future increase in the company's value.
• The receipt of the all-cash merger consideration will be a taxable transaction for U.S. federal income tax purposes for U.S. Holders.
• The announcement and pendency of the merger, or its failure to complete, may cause substantial harm to the company's relationships with employees, OEM suppliers, and airline customers.
• The company may be required to pay a termination fee of $225,000,000 under certain circumstances, which could potentially discourage other acquirers.
• Significant costs are involved in connection with entering into and completing the merger, and substantial management time and effort will be required, potentially disrupting business operations.
• Restrictions on the company's conduct of business prior to the merger's completion could delay or prevent the company from pursuing new business opportunities and financing transactions.
• The company's debt-to-equity ratio remained above its target of 2.5x to 1x since the 2022 write-off of its Russian fleet, which had previously constrained capital allocation and share repurchase programs.
• Projected core lease margins were expected to decline through the end of 2025 due to higher interest expense from rising interest rates and the impact of COVID-era lease restructurings.

Risks

• The merger may not be completed due to the failure to receive required Class A Common Stockholder approvals.
• The merger may not be completed due to the failure to receive, on a timely basis or subject to unanticipated conditions, required approvals from governmental or regulatory agencies in numerous jurisdictions (e.g., HSR Act, CFIUS, and over 20 other countries).
• The occurrence of any event, change, or circumstance could give rise to the termination of the merger agreement.
• Legal proceedings, including potential future stockholder litigation, could prevent or delay the completion of the merger, as the absence of any legal restraint is a closing condition.
• The pendency and uncertainty of the merger could disrupt the company's business and current operations, potentially leading to difficulties in employee retention.
• The announcement of the merger could negatively affect the company's business relationships with customers, suppliers, and employees.
• Adverse political and economic conditions, severe disruptions to the economy, financial markets, and competitive markets could impact the business.
• Unanticipated legislative or regulatory developments could arise.
• Restrictions under certain covenants in the merger agreement during the pendency of the merger may impact the company's ability to pursue business opportunities and access financing sources.
• Restrictions on the company's ability to incur additional debt may negatively impact its liquidity and ability to maintain investment-grade ratings.
• Risks related to the company's significant indebtedness and the continued availability of capital and financing sources, as well as adverse rating agency actions.
• The company's Class A Common Stock price may decline significantly if the merger is not consummated.
• The transaction may involve unexpected costs, liabilities, or delays.

Future Outlook

The company's internal projections for fiscal years 2025-2032 anticipate an improvement in the interest rate environment, based on market expectations as of August 2025, and assume current market conditions persist without major disruptions in the aviation sector. These projections forecast continued profitability, with Adjusted Return on Average Common Equity (ROACE) increasing from 7.7% in 2026-2027 to 9.4% by 2029-2032, and assume ongoing investment in the asset base through aircraft purchases. The projections for 2025 include a nonrecurring after-tax insurance recovery of $587 million related to the Russian fleet.

Management Comments

• We cordially invite you to attend a special meeting of the stockholders of Air Lease Corporation... to consider and vote on a proposal... under which the Company will be acquired by Parent.
• The Air Lease Board unanimously determined that the merger agreement and the transactions contemplated thereby, including the merger, are fair to and in the best interests of the Company and its stockholders, and approved and declared advisable the execution, delivery and performance of the merger agreement.
• The Air Lease Board unanimously recommends that you vote FOR the approval and adoption of the Merger Proposal, FOR the compensation that will or may become payable by the Company to its named executive officers in connection with the merger; and FOR the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the special meeting to approve the Merger Proposal.
• The Air Lease Board believes that the value offered to the company's Class A Common Stockholders pursuant to the merger agreement is more favorable than the potential value that might reasonably be expected from remaining an independent public company or pursuing other strategic transactions.
• The Air Lease Board believes that $65.00 per share was the highest price Parent was willing to pay and the best price reasonably attainable for the company's Class A Common Stockholders, with the most favorable terms and conditions Parent was willing to agree to.

Industry Context

The filing indicates that Air Lease Corporation operates in the aircraft leasing industry, focusing on purchasing modern, fuel-efficient commercial jet aircraft for lease to airlines, as well as aircraft sales and fleet management services. The strategic review process considered the competitive landscape and the increasing importance of operational scale and financial resources for competitiveness. The acquisition by a consortium including SMBC Aviation Capital, a leading aircraft operating lease company, and global alternative asset managers like Apollo and Brookfield, suggests a trend towards consolidation and private equity involvement in the sector, potentially driven by the need for greater financial resources and scale to navigate macroeconomic and geopolitical challenges, such as the impact of the Russian fleet write-off and rising interest rates.

Comparison to Industry Standards

• J.P. Morgan's public trading multiples analysis compared Air Lease with AerCap Holdings N.V. (AerCap), noting AerCap's Price to 2Q25A Book Value Per Share (BVPS) of 1.20x and Price to 2026E Earnings Per Share (EPS) of 9.1x.
• Air Lease's Price to 2Q25A BVPS was 0.92x and Price to 2026E EPS was 11.6x, as of August 29, 2025.
• The merger consideration of $65.00 per share implies a Price to 2Q25A BVPS of approximately 0.99x ($65.00 / $65.53 BVPS as of June 30, 2025) and a Price to 2026E EPS of approximately 12.60x ($65.00 / $5.16 2026E EPS).
• The implied Price to 2Q25A BVPS of 0.99x falls within J.P. Morgan's selected reference range of 0.92x to 1.20x for comparable public companies.
• The implied Price to 2026E EPS of 12.60x is above J.P. Morgan's selected reference range of 9.1x to 11.6x for comparable public companies.
• J.P. Morgan's selected transactions analysis, which included various aircraft leasing acquisitions, showed a Price to Book Value (P/BV) reference range of 0.66x to 1.67x.
• The implied P/BV of approximately 0.99x ($65.00 / $65.96 BVPS pro forma for Russia insurance proceeds) falls within the selected transaction range.
• BOC Aviation Limited was excluded from direct public trading multiples comparison due to its control by a Chinese state-owned enterprise and its listing on The Stock Exchange of Hong Kong.

Management Changes

Corporate Governance

Legal Proceedings

• On October 30, 2025, a purported Class A Common Stockholder filed a lawsuit, 'Lincoln Sise vs. Air Lease Corporation, et. al., Case No. 2:25-cv-10445,' in the United States District Court for the Central District of California against the company and its current directors.
• The complaint alleged violations of Sections 14(a) and 20(a) of the Exchange Act, claiming omissions or misrepresentations of material information in the preliminary proxy statement.
• The lawsuit sought injunctive relief to enjoin the merger, rescission or rescissory damages if the merger was consummated, dissemination of a proxy statement without untrue statements, and recovery of attorneys' and experts' fees.
• On November 3, 2025, the plaintiff filed a notice for voluntary dismissal of its claims without prejudice.
• Additional lawsuits arising out of or relating to the merger agreement or the merger may be filed in the future, and such litigation, if not resolved, could prevent or delay the completion of the merger.

Related Party Transactions

• Parent, the acquiring entity, will be jointly owned by Sumitomo Corporation, SMBC Aviation Capital Limited, and affiliates of Apollo Capital Management, L.P. and Brookfield Asset Management Ltd. (collectively, the 'Investors' or 'Equity Investors').
• Sumitomo Corporation and SMBC Aviation Capital Limited (the 'Guarantors') have provided Limited Guarantees to the company, severally guaranteeing Parent's payment obligations related to termination fees, reimbursement, and indemnification under the merger agreement.
• The company's directors and certain executive officers (Gregory Willis and Carol Forsyte), collectively referred to as 'Supporting Stockholders,' entered into a voting agreement with Parent, agreeing to vote their shares (up to 4.99% of outstanding Class A Common Stock) in favor of the merger proposal.
• J.P. Morgan Securities LLC, the company's financial advisor, has had commercial or investment banking relationships with the company, SMBC Aviation Capital Limited, Sumitomo Mitsui Banking Corporation, Sumitomo Mitsui Financial Group, Inc., Apollo Global Management, Inc., and Brookfield Asset Management Ltd., and their respective portfolio companies, for which it received customary compensation.

Stakeholder Impact

• Shareholders (Class A Common Stock): Will receive $65.00 per share in cash, providing immediate liquidity and a significant premium over recent trading prices, but will lose future ownership interest and potential upside in the company.
• Shareholders (Preferred Stock): Their shares will remain outstanding with the same rights, preferences, privileges, and voting powers in the surviving corporation.
• Employees: Will be provided with base salary/hourly wage, short-term cash incentive opportunities, and target long-term incentive opportunities (potentially cash-based) at least equal to pre-merger levels for one year post-closing. Service credit will be recognized for benefits, and certain health benefit waivers will apply. Executive officers have interests in the merger that may be different from general stockholders, including severance and equity acceleration.
• Customers (Airlines): The company will continue its business of leasing aircraft. The Orderbook Transfer to SMBC AC is contemplated, which could impact future relationships or terms, though OEM consents are not a closing condition.
• Suppliers (OEMs): The company will cooperate to facilitate the transfer of its orderbook to SMBC AC. Relationships with OEM suppliers could be affected by the change in ownership.
• Creditors: The merger involves significant debt financing and potential refinancing of existing indebtedness. The transaction is structured to preserve the company's investment-grade credit rating, and Limited Guarantees are in place for certain Parent obligations.
• Management: Executive officers and directors have interests in the merger, including accelerated vesting of equity awards and severance payments upon qualifying termination. The new management structure will consist of Merger Sub's directors and officers, potentially including some from the current company.

Next Steps

• The company will hold a special meeting of stockholders on December 18, 2025, to vote on the Merger Proposal, Compensation Proposal, and Adjournment Proposal.
• The company will respond promptly to any comments from the SEC regarding the proxy statement.
• The company and Parent intend to promptly prepare and file requisite notification forms with CFIUS and all other relevant non-U.S. antitrust and foreign investment authorities.
• Parent and Merger Sub will use reasonable best efforts to arrange, obtain, and consummate the debt financing (including any alternative or takeout financing).
• The company will cooperate with Parent and Merger Sub to facilitate the transfer of the Orderbook to SMBC Aviation Capital Limited effective immediately following the closing.
• If the merger is completed, the Class A Common Stock will be delisted from the NYSE and deregistered under the Exchange Act.
• If the merger is not completed, the Air Lease Board will continue to evaluate and review the company's business, operations, and strategic direction.

Key Dates

Recommendation

The proposed all-cash acquisition at $65.00 per share offers a substantial premium over recent and historical trading prices, providing immediate and certain value to Class A Common Stockholders. The unanimous board recommendation, coupled with secured financing and the dismissal of initial litigation, suggests a high probability of successful completion. While regulatory approvals and potential delays exist, the financial terms are highly attractive, making it a strong buy for investors seeking a quick, profitable exit.

Keywords

Air Lease Corporation, AL, Merger, Acquisition, Aircraft Leasing, Sumitomo Corporation, SMBC Aviation Capital, Apollo Capital Management, Brookfield Asset Management, SEC Filing, Proxy Statement, Cash Offer, Shareholder Vote, Regulatory Approval, DEFM14A