AerCap bid likely to pass reviews; Live Nation awaits antitrust OKs; Blockbuster concerns ease

By Cristal Cody

Tupelo, Miss., Sept. 18 - AerCap Holdings NV's all-stock proposal to acquire rival aircraft leasing company Genesis Lease Ltd. should clear regulatory reviews, company executives said Friday.

Meanwhile, Live Nation, Inc. filed a joint preliminary proxy statement for its $400 million stock acquisition of Ticketmaster Entertainment, Inc. but did not set a date yet for the shareholders meeting as the companies continue to wait for regulatory approvals.

Also, wrapping up the week, Blockbuster Inc. staved off growing liquidity concerns.

A market source said Friday that Blockbuster's international asset sales and a $675 million debt offering gave the company a "much-needed lifeline."

On Wall Street, stocks edged higher.

The Dow Jones Industrial Average added 36.28 points, or 0.37%, to close at 9,820.20.

The Standard & Poor's 500 index rose 2.81 points, or 0.26%, to 1,068.30, while the Nasdaq Composite index closed up 6.11 points, or 0.29%, at 2,132.86.

Genesis aims for immediate value

Under the terms of the agreement, Genesis shareholders will receive one AerCap share for every Genesis share. Based on Thursday's closing price, the offer values Genesis stock at $8.81 a share.

Amsterdam-based AerCap values the acquisition of Shannon, Ireland-based Genesis at $1.75 billion.

The combined company will be the leading independent aircraft leasing company with a total fleet of 358 commercial aircraft and a lease portfolio currently valued at $6 billion.

AerCap chief executive officer Klaus Heinemann said Friday on a conference call with analysts that the deal offers $10 million in annual cost synergies and the combined company will have a market capitalization of more than $1 billion.

John McMahon, chairman & CEO of Genesis, said the transaction gives shareholders an immediate premium to the company's recent stock trading levels.

On Monday, Genesis said it was in deal talks after the stock spiked on takeover speculation.

"This combination advances our key objectives in a single transaction," McMahon said on the call. The deal generates significant portfolio growth and provides "benefits of scale," he said.

The transaction is subject to approval by Genesis shareholders and regulatory approvals.

Heinemann said on the conference call that the acquisition will require regulatory approvals from the United States, Germany and Turkey, but no problems are anticipated.

"We're far away from market dominance in any of those markets," he said.

Scott Valentin, an analyst with FBR Capital Markets Corp., said in a research note released to Prospect News that "other sellers crowd" the aircraft market.

New York-based American International Group, Inc. plans to sell its International Lease Finance Corp., while CIT Group Inc. may sell its aircraft and the Royal Bank of Scotland Group plc may sell RBS Aviation.

"AIG has been shopping its ILFC unit (1,000 units, but looks like only a portion of fleet will be sold); RBS Aviation, with 372 aircraft, as well as CIT are purported to be shopping their portfolios," Valentin said.

AerCap expects the transaction to close in the fourth quarter.

Shares of Genesis added 37 cents, or 4.38%, to close Friday at $8.82.

AerCap shares rose 13 cents, or 1.48%, to $8.94.

New York-based CIT's stock lost 1 cent, or 0.68%, to end at $1.45, while AIG shares increased by 48 cents, or 1.22%, to $39.91.

Royal Bank of Scotland's U.S.-listed shares dropped 13 cents, or 0.70%, to $18.39.

Live Nation awaits final say

Concert promoter Live Nation filed a joint preliminary proxy statement with the Securities and Exchange Commission on Tuesday on its acquisition of Ticketmaster.

The company continues to await regulatory clearance for its acquisition of West Hollywood, Calif.-based Ticketmaster and has not set a date for shareholders to approve the issuance of stock needed to complete the deal.

The deal requires antitrust approval from regulators in the United States, Canada and the United Kingdom.

In June, the transaction was referred to London's Competition Commission, which is expected to make a decision by Nov. 24.

The companies had expected the deal to close in the third or fourth quarter.

Ticketmaster and Live Nation representatives did not return calls for additional comment.

On Friday, Beverly Hills, Calif.-based Live Nation said in a statement that it completed the sale of several real estate holdings in Boston, including the Boston Opera House and Orpheum Theatre, for $22.5 million in cash plus fees from the Orpheum for the next five years.

"In our continuing focus on de-leveraging our balance sheet, 50% of the closing proceeds will be applied as a permanent reduction in term loans, with the balance to remain available for general working capital purposes," Michael Rapino, president and CEO of Live Nation, said in the statement.

Live Nation shares closed down 5 cents, or 0.58%, at $8.60 on Friday, while Ticketmaster shares slipped 32 cents, or 2.57%, to $12.14.

Blockbuster looks to future

On Thursday, Blockbuster announced it priced $675 million in senior secured notes and plans to use the proceeds to repay debt.

"The five-year notes replace the current credit facility and term loan B and certainly remove any imminent liquidity crisis," a market observer said Friday. "We can now focus on where Blockbuster will go from here with the liquidity crisis behind the company."

Dallas-based Blockbuster also said it plans to close 810 to 960 stores by the end of 2010 as part of a multi-plan approach, which includes additional movie rental kiosks, mail orders and online digital video rentals, to regain market share.

In August, Blockbuster sold its Irish entertainment retailer, Xtra-vision Ltd., for $45 million in cash.

Blockbuster has 3,750 company-operated stores and 606 franchised stores.

Shares of Blockbuster fell 3 cents, or 2.16%, to close Friday at $1.36.

Mentioned in this article:

AerCap Holdings NV NYSE: AER

American International Group, Inc. NYSE: AIG

Blockbuster Inc. NYSE: BBI

CIT Group Inc. NYSE: CIT

Genesis Lease Ltd. NYSE: GLS

Live Nation, Inc. NYSE: LYV

Royal Bank of Scotland Group plc NYSE: RBS

Ticketmaster Entertainment, Inc. Nasdaq: TKTM

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