Assessing Shareholder Value in Air Lease Corporation’s Proposed $65-per-Share Buyout

The proposed $65-per-share buyout of Air Lease Corporation (AL) by a consortium led by Sumitomo Corporation, SMBC Aviation Capital, Apollo, and Brookfield has sparked intense debate among investors and analysts. While the offer represents a 31% premium over AL’s 12-month average share price and a 7% premium over its all-time high [1], the valuation and governance risks embedded in the deal warrant closer scrutiny. This analysis evaluates the fairness of the $7.4 billion cash offer, the financial health of AL, and the regulatory and structural challenges that could impact shareholder value.

Valuation: A Premium, but at What Cost?

The $65-per-share offer values AL at approximately $7.4 billion in equity, with total transaction value—including debt—reaching $28.2 billion [1]. To assess whether this reflects intrinsic value, we must compare it to industry benchmarks and AL’s financial metrics.

AL’s enterprise value-to-EBITDA (EV/EBITDA) ratio, a key metric in aircraft leasing, is approximately 10.8x, calculated using the $28.2 billion total value and AL’s peak 2025 EBITDA of $2.624 billion [1][2]. This far exceeds the industry average of 5x [3], suggesting the offer is significantly above typical valuation multiples. While AL’s robust order book of 241 aircraft and its position as a top-three global lessor justify some premium, the 10.8x multiple implies a high degree of optimism about future cash flows, particularly in a sector sensitive to interest rates and aircraft demand cycles.

The P/E ratio further complicates the picture. AL’s current P/E of 7.73 [4], though lower than its 10-year average of 9.13, reflects a market that may be discounting risks such as rising debt costs and regulatory headwinds. The buyout price, however, assumes sustained EBITDA growth and stable leverage, which may not materialize if interest rates remain elevated or if demand for leased aircraft softens.

Governance Risks: Complexity and Regulatory Scrutiny

The deal’s governance structure introduces additional risks. The consortium’s diverse stakeholders—ranging from Japanese financial institutions to U.S. private equity firms—could lead to conflicting priorities. For instance, Brookfield and Apollo may prioritize short-term returns, while SMBC Aviation Capital, with its long-standing expertise in aircraft leasing, might focus on operational efficiency. Such divergent objectives could strain decision-making post-merger.

Regulatory challenges also loom large. The Biden administration’s aggressive antitrust enforcement has already derailed high-profile mergers, such as Kroger & Albertsons and JetBlue & Spirit [5]. The AL deal, which would create the second-largest aircraft leasing entity globally, could face similar scrutiny. Fitch Ratings has already revised AL’s outlook to negative [1], and analysts at TD Cowen and Deutsche Bank have downgraded the stock to “Hold,” citing concerns over market concentration and regulatory delays [6].

Moreover, the post-merger governance structure—headquartered in Dublin with a $12 billion capital stack from SMBC, Citigroup, and Goldman Sachs—may obscure accountability. As noted in a 2024 Federal Register analysis, complex corporate structures can hinder regulatory oversight, particularly in assessing antitrust compliance [7]. This opacity could delay approvals or trigger demands for divestitures, as seen in recent U.S. and EU merger cases [8].

Balancing the Equation: Shareholder Value vs. Risk

For shareholders, the $65 offer provides immediate liquidity at a premium, but the long-term value depends on the deal’s execution. The consortium’s $12 billion financing plan and AL’s existing $21.7 billion debt load [2] suggest a leveraged structure that could amplify risks if interest rates rise further. Additionally, the integration of AL’s order book into SMBC’s portfolio may face operational hurdles, particularly if the new entity struggles to manage its expanded fleet amid volatile demand.

Conclusion

The AL buyout reflects a strategic bid to consolidate the aircraft leasing industry, but its valuation multiples and governance risks raise critical questions. While the $65-per-share offer appears generous on paper, the 10.8x EV/EBITDA premium and regulatory uncertainties suggest that the deal’s success hinges on the consortium’s ability to navigate complex integration challenges and maintain AL’s operational momentum. Shareholders must weigh the immediate benefits of the offer against the long-term risks of a highly leveraged, structurally complex entity in a sector prone to volatility.

Source:
[1] Air Lease Set to be Purchased for $65.00 Per Share in Cash, [https://www.nasdaq.com/articles/air-lease-set-be-purchased-6500-share-cash]
[2] Breaking Down Air Lease Corporation (AL) Financial Health, [https://dcfmodeling.com/blogs/health/al-financial-health?srsltid=AfmBOooDu47y8H78VvcbsFP4hmI_n23HDbDTKPMaO9MRTj0fQBYTiSzu]
[3] Air Transport Services Group: Amazon Snub Should Not..., [https://seekingalpha.com/article/4558392-air-transport-services-group-amazon-snub-should-not-dim-long-term-prospects]
[4] AL - Air Lease PE ratio, current and historical analysis, [https://fullratio.com/stocks/nyse-al/pe-ratio]
[5] Failed M&A Deals (2023–2025): Data-Driven Insights on Collapsed Mega-Mergers, [https://medium.com/@katerinav0302/failed-m-a-deals-2023-2025-data-driven-insights-on-collapsed-mega-mergers-d151cd3a20ae]
[6] Deutsche Bank downgrades Air Lease after $65-a-share..., [https://www.investing.com/news/stock-market-news/deutsche-bank-downgrades-air-lease-after-65ashare-takeover-deal-4221975]
[7] Premerger Notification; Reporting and Waiting Period..., [https://www.federalregister.gov/documents/2024/11/12/2024-25024/premerger-notification-reporting-and-waiting-period-requirements]
[8] DAMITT Q2 2025: U.S. Merger Remedies Make a Return, [https://www.dechert.com/knowledge/publication/2025/7/damitt-q2-2025.html]