DEFA14A: Air Lease to be Acquired for $7.4 Billion in Cash Deal

Air Lease Corporation has agreed to be acquired by a consortium led by Sumitomo Corporation and SMBC Aviation Capital for $65.00 per share in cash, valuing the company at approximately $7.4 billion.

Summary

• Air Lease Corporation (AL) will be acquired by Gladiatora Designated Activity Company, a new holding company owned by Sumitomo Corporation, SMBC Aviation Capital Limited, Apollo Capital Management, L.P., and Brookfield Asset Management Ltd.
• Class A common stockholders will receive $65.00 in cash per share, representing a total equity valuation of approximately $7.4 billion.
• The total enterprise value, including debt obligations to be assumed or refinanced net of cash, is approximately $28.2 billion.
• The merger consideration offers a 7% premium over Air Lease's all-time high closing stock price on August 28, 2025, a 14% premium over the 30-trading day volume-weighted average share price, and a 31% premium over the 12-month volume-weighted average share price, both as of August 29, 2025.
• Air Lease's Series B, C, and D Preferred Stock will remain outstanding as preferred stock of the surviving corporation with the same rights.
• Vested restricted stock units (RSUs) will be converted into cash, while unvested RSUs and performance stock units (PSUs) will become contingent cash awards, retaining their vesting terms, with PSUs no longer subject to performance-based conditions.
• The transaction is subject to customary closing conditions, including approval by Air Lease's Class A common stockholders and various regulatory approvals (e.g., HSR Act, non-U.S. antitrust, CFIUS).
• A group of directors and executive officers, collectively holding approximately 6.17% of outstanding common stock, have entered into a voting agreement to support the transaction.
• The merger is not subject to any financing contingency, with equity commitments of $5.4 billion and debt commitments of $12.1 billion secured by the Parent.

Sentiment

Score: 8

Explanation: The announcement of a cash acquisition at a significant premium over recent and historical stock prices, coupled with committed financing and strong institutional backing, indicates a very positive outlook for shareholders. The certainty of cash value and the strategic nature of the buyers are strong positives, despite the loss of future independent growth potential.

Positives

• Provides an immediate premium and certainty in cash value to Class A common stockholders.
• The $65.00 per share cash consideration represents a 7% premium over Air Lease's all-time high closing stock price on August 28, 2025.
• The premium is 14% over the 30-trading day volume-weighted average share price and 31% over the 12-month volume-weighted average share price, both as of August 29, 2025.
• The transaction is fully financed with committed equity and debt, removing financing contingency risk for the acquisition.
• Preferred stockholders retain their existing rights in the surviving corporation, ensuring continuity for this class of investors.
• Unvested performance stock units (PSUs) will convert to cash awards without performance-based conditions, providing certainty for employees holding these awards.

Negatives

• Common stockholders will no longer participate in the future growth or potential upside of Air Lease Corporation as a standalone public entity.
• Air Lease will cease to host earnings calls for Q3 2025 and subsequent periods while the transaction is pending, reducing public transparency.
• There may be challenges with employee retention due to uncertainty surrounding the transaction.
• Restrictions on Air Lease's ability to incur additional debt prior to closing could negatively impact its liquidity and ability to maintain investment-grade ratings.
• Air Lease may be required to pay a termination fee of $225,000,000 under specified circumstances, such as entering into an agreement for a superior proposal.

Risks

• One or more closing conditions, including regulatory approvals (HSR Act, non-U.S. antitrust, CFIUS) or stockholder approval, may not be satisfied or waived on a timely basis or at all.
• A governmental entity may prohibit, delay, or refuse to grant approval for the consummation of the transaction.
• The business of Air Lease may suffer as a result of uncertainty surrounding the transaction.
• Challenges with employee retention may arise due to the pending transaction.
• The transaction may involve unexpected costs, liabilities, or delays.
• Legal proceedings may be initiated related to the transaction.
• Changes in economic conditions, political conditions, and changes in laws or regulations may occur.
• An event, change, or other circumstance may occur that could give rise to the termination of the merger agreement, potentially requiring a party to pay a termination fee.
• New risks and uncertainties may emerge, and it is not possible for Air Lease to predict or assess the impact of every factor that may cause its actual results to differ from forward-looking statements.

Future Outlook

The transaction is expected to close in the first half of 2026, subject to customary closing conditions including stockholder and regulatory approvals. Air Lease will cease to host earnings calls for Q3 2025 and subsequent periods while the transaction is pending.

Management Comments

• "Since founding Air Lease in 2010, we have been unwavering in our mission to shape the future of the aviation industry and provide airlines around the world with access to the most modern, fuel-efficient aircraft. After thoughtful consideration, the Board has unanimously determined that this transaction represents the best path forward for our company as it will deliver an immediate premium and certainty in cash value to our Class A common stockholders." Steven Udvar-Hazy, Chairman of the Board of Air Lease.
• "This is an exciting next chapter for Air Lease and is a testament to the strength of Air Leases business, our talented team and the long-standing partnerships weve fostered across the global aviation industry. I am fully confident that this transaction will benefit all Air Lease common stockholders and the industry we serve. We would like to thank our talented and dedicated employees for helping us achieve this significant milestone and for their continued dedication as we prepare to enter this new chapter." John L. Plueger, Chief Executive Officer and President of Air Lease.

Industry Context

The acquisition by a consortium including major strategic players like Sumitomo Corporation and SMBC Aviation Capital, alongside financial investors Apollo and Brookfield, signals a significant consolidation or strategic investment trend within the aircraft leasing sector. The planned transfer of Air Lease's orderbook to SMBC AC suggests a strategic move to enhance SMBC AC's market position in new aircraft deliveries. This transaction likely reflects a strong belief in the long-term growth prospects of the aviation industry and the enduring value of modern, fuel-efficient aircraft assets.

Comparison to Industry Standards

• The acquisition premium of 7% over the all-time high closing stock price and 31% over the 12-month volume-weighted average price suggests a robust valuation for Air Lease, potentially exceeding typical market premiums for comparable companies in the aircraft leasing sector, reflecting the strategic value of Air Lease's assets and market position.
• The involvement of major financial and strategic investors like Sumitomo, SMBC Aviation Capital, Apollo, and Brookfield indicates a high level of confidence in the long-term prospects of the aircraft leasing industry, potentially setting a benchmark for future valuations and investment activity in the sector.
• The transfer of Air Lease's orderbook to SMBC AC could significantly enhance SMBC AC's standing in new aircraft deliveries, potentially positioning it to rival or surpass the orderbook sizes of other leading lessors such as AerCap or Avolon.

Management Changes

Corporate Governance

Legal Proceedings

• The filing notes a risk that legal proceedings may be initiated related to the transaction.
• Air Lease is obligated to promptly notify Parent of any such litigation and keep Parent informed of its status.
• Air Lease must give Parent the opportunity to consult and participate in the defense or settlement of any such litigation.
• Air Lease cannot compromise or settle any stockholder litigation without Parent's written consent, unless the settlement involves monetary damages within specified limits and no material injunctive relief, after consultation with Parent.

Related Party Transactions

• The acquiring entity, Gladiatora Designated Activity Company (Parent), is a new holding company owned by Sumitomo Corporation, SMBC Aviation Capital Limited, Apollo Capital Management, L.P., and Brookfield Asset Management Ltd., which are the Equity Investors.
• Sumitomo Corporation and SMBC Aviation Capital Limited (Guarantors) have provided limited guarantees to Air Lease for certain monetary obligations of Parent under the merger agreement.
• A key part of the transaction involves the transfer of Air Lease's orderbook (OEM Contracts) to SMBC Aviation Capital Limited, effective immediately following the Closing.
• Air Lease's directors and executive officers (Steven Udvar-Hazy, John Plueger, Robert Milton, Matthew Hart, Yvette Hollingsworth Clark, Cheryl Gordon Krongard, Marshall Larsen, Susan McCaw, Ian Saines, Gregory Willis, and Carol Forsyte) entered into a Voting Agreement with Parent, committing to vote their shares (approximately 6.17% of outstanding common stock) in favor of the merger.

Stakeholder Impact

• **Shareholders (Class A Common Stock)**: Will receive a significant cash premium, providing immediate and certain value, but will no longer participate in the company's future growth as a public entity.
• **Shareholders (Preferred Stock)**: Their preferred stock will remain outstanding with the same rights in the surviving corporation, maintaining their investment terms.
• **Employees**: May face uncertainty and potential challenges with retention due to the pending transaction, though unvested equity awards are converted to cash awards with continued vesting.
• **Customers (Airlines)**: The transfer of the orderbook to SMBC Aviation Capital could lead to changes in their relationship with the new entity, though the core business of aircraft leasing is expected to continue.
• **Suppliers (OEMs)**: Will be involved in the process of consenting to the orderbook transfer, potentially impacting future relationships and contract terms.
• **Creditors**: Existing debt obligations will either be assumed or refinanced, and the company's ability to incur new debt is restricted prior to closing, which could affect credit ratings and financial flexibility.

Next Steps

• Air Lease will prepare and file a preliminary proxy statement on Schedule 14A with the SEC.
• Air Lease will mail the definitive proxy statement and proxy card to stockholders.
• Air Lease will hold a Company Stockholder Meeting to seek approval for the merger and an advisory vote on executive compensation.
• The parties will work to obtain required regulatory approvals, including under the HSR Act, non-U.S. antitrust and competition laws, and CFIUS.
• Air Lease will cooperate with Parent and Merger Sub to facilitate the transfer of its orderbook (OEM Contracts) to SMBC AC, effective immediately following the Closing.
• Air Lease will cooperate with Parent for delisting from the NYSE and deregistration under the Exchange Act as promptly as practicable after the Effective Time.
• Parent and Merger Sub will arrange, obtain, and consummate the Debt Financing and/or any Takeout Financing.
• Parent and Merger Sub will provide funds for Air Lease to repay and discharge all Payoff Indebtedness at the Effective Time.

Key Dates

Recommendation

The acquisition offers a substantial cash premium to shareholders, significantly above recent and historical trading prices, providing immediate and certain value. The transaction is fully financed with strong institutional backing and is not subject to a financing contingency, reducing execution risk. While the company will no longer be publicly traded, the terms of the acquisition are highly favorable for existing common stockholders, making it a strong buy for those seeking a quick, profitable exit.

Keywords

Air Lease Corporation, AL, Merger, Acquisition, Sumitomo Corporation, SMBC Aviation Capital, Apollo Capital Management, Brookfield Asset Management, Aircraft Leasing, Aviation Industry, SEC Filing, Cash Acquisition, Corporate Governance, Shareholder Value