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AerCap Holdings N.V. (AER)

NYSE - Nasdaq Real Time Price. Currency in USD
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59.15-1.15 (-1.91%)
As of 10:13AM EDT. Market open.
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  • J
    JC
    Just listened to conference call with management and ran through the numbers. AER is purchasing (GECAS's) $34-35B of leased assets for $31.2B ($6B equity, at a $56 share price, plus $25B debt), equal to an EV/leased asset ratio of 90-92%, an 8-10% discount to book. Deal will roughly double AER's leased assets (when finalized in late 2021) and GE will own 44% of the combined company's 241.5M shares. Timing of doubling leased assets is great given that the industry's financials will recover strongly in 2021-2024 (from the 2020 Covid downturn), with leasing likely representing 60%+ (from 40%) of airline fleets (as airlines foremost focus on reducing debt loads rather than purchasing planes). The combined entity should generate $5B and $6B in cash flow in 2021 and 2022 (what they did in 2019), equal to $20.70 and $24.80 per share, respectively. Cash flow will be used initially to reduce leverage (3X debt/equity after deal) and then to buy back shares. GE's three (9, 12 and 15 month) AER share lockups enable GE to benefit from AER's financial rebound. AER (at $56) is trading at 2.7X and 2.25X (combined entity) 2021 and 2022 operating cash flows. AER share price should appreciate to $85-100 (3.5-4X cash flow) over next 24 months. Stock is a strong BUY.
    Bullish
  • N
    NosferatuGatsu
    A few people have misunderstood this GECAS purchase slightly so I just wanted to point out to everyone who may be in a similar situation:

    AER is buying GECAS for $31.2 billion ($24 billion of cash from debt issuance + $1 billion in cash or notes + $6.2 billion worth of stock).

    AER is NOT assuming any GECAS/GE debt in the deal. GECAS is being acquired debt free, with GE retaining any debt related to GECAS to be paid off as they will with the money they receive from AER. When AER closes the transaction in ~Q4 2020 their debt balance will have increased by ~$24 billion as a result of the transaction. It will not be ~$24 billion + $20+ billion of GECAS debt. They're paying so much in cash because the company is coming to them without any debt on the books.

    This is basically the opposite of AER's purchase of ILFC in 2014 when they paid $7.1 billion in cash and stock while assuming $21 billlion of ILFC's net outstanding debt in the transaction.
  • G
    GJ
    Deal seems fair valued. Rough calculation: 30 bln for an annual revenue of 3.7 bln (average of 2018 - 2020), about 12%. Similar to Aercaps revenue / enterprise value. Fleet ages are similar.
    So overall I expect the outcome will be good. More scale, negotiation power etc.
    Bullish
  • F
    Flepo1
    So in a good year gecas makes 1b profit, we now spend 6b in equity to get it. Which makes it a yield of 16%. However, we also add 25B in cash payment, financing for 10 year at let's say 2,5% would deduct about 600M from the profit. Meaning we are left with 400M which is 6,7% on our equity. I am not sure this is what I want, I might vote against the deal. But maybe somebody can explain this more to me. I also worry since gecas had declining revenue for the last couple of years before covid.
    Neutral
  • s
    stocktargetadvisor
    $AER
    Target Raised by Barclays Overweight USD 58 » USD 68
    Upgrades Stephens & Co. Overweight USD 58 » USD 88
    Target Raised by Deutsche Bank Buy USD 55 » USD 67
  • T
    Todd
    One more note on this. If I am right that AER just threw away $10-$15 billion - that is one to to times AER;s total market cap. I don't think this will happen, but this move could result in wiping out the company (or at least the shareholders - via bankrupt) over time. Not saying this huge downside will happen, but give the enormity of this deal, it could...
  • c
    chris
    Anybody have a thought on what this GE deal means for us?
  • G
    Greg
    Was going to be happy with this raising to $60 by the summer (my investment turns into long term then), but now there is this odd sized wrench that got thrown in. Still holding because I think long term it'll do well, but now it's going to be longer term than I thought.
  • T
    Todd
    Well it is official. AER just did great harm to their business. It may take a few years for everyone to realize this, but when you do a deal of this size and you over pay by a factor of 3 or 4, your company will suffer for it. I predict by the end of 2023 AER will be a $30-$40 stock with a full COVID recovery - sub $25 without a full COVID recovery - management just flushed a minimum of $10 billion down the drain and more likely $15 billion or so...What a stupid deal. When one company acquires another it is a lot like buying a car or a house. If you are willing to walk (really willing to walk) that is when you can negotiate a good deal. When the seller senses they have you - as a buyer you are in big trouble. AER had their mind made up going in they wanted this - and AER got taken to the cleaners. I have no idea how the stock will react short -term, but over time, people will see clearly how bad this deal is for AER - I really like AER - so I am very disappointed in their very poor management decision here...If we get a pop I am gone for sure, I may even just sell at any price - so sad. I was really hoping the rumors were not true ...
  • x
    xyz
    Any one know the fair value of aer after this deal?
  • B
    Bruh
    Who's holding to 60?
  • F
    Flepo1
    This management is good, if there is a deal it will be good
    Bullish
  • B
    Bruh
    Will you be voting for or against the deal and why? (Addressed to all)
  • M
    Michael
    GE buying a company that they'll lease back to themselves is my first thought.
  • b
    bazurto
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  • B
    Bruh
    Great day for long AER holders, enjoy the weekend.🥂
    Bullish
  • j
    jon
    I just sent this note to AER IR contact : "Good day;

    I have been an investor in financial stocks for over 40 years... An observation/comment if I may. I do not believe there is a lease you can make that has a greater return ,less risk then to immediately commence a major share buyback! Unless aircraft are only worth .20 cents on the dollar I would like to understand how a buyback is not the most alluring opportunity that management has ever encountered!

    Please let me know what I am not understanding ,

    Thank you

    "
  • j
    jon
    A buyback at 33% of the $75 BV is a guaranteed winner for shareholders! No credit risk! Or are shareholders better off sitting with the liquidity for the strong sales/leaseback returns that will occur once the FAA gives the ok to the 737 Max; and airlines look for financing.? How about a blend. I know they want a boost in their credit rating,so are being conservative, but buying shares back is a no brainer!!! Hello
    Bullish
  • j
    jon
    Still less than 50% of >75 book value, I am assuming we get a beat on earnings based on companies recent update! Now vaccine coming shortly!
    Bullish
  • D
    David
    Anybody still here? No reopening investors left? Everybody split for the latest reddit buzz stock?