AerCap interest in an Easyjet take-over highly debatable, Credit Suisse says
AerCap's interest in participating in a take-over of EasyJet was "highly debatable", analysts at Credit Suisse said.
Various published reports on 19 August had suggested that EasyJet's founder and AerCap might try to take the firm private, with US private equity outfits having also been cited as potential suitors.
First of all, purchasing an airline would constitute a "major divergence" in strategy for the world's largest lessor of airplanes, the Swiss broker's analysts said.
Relative valuations were another consideration, analysts Neil Glynn, Tim Ramskill, Julia Pennington and Arthur Truslove said in a research note sent to clients on 19 August.
AerCap was changing hands at a forecast 2017 book-value of 0.88 whereas EasyJet was trading on a P/B multiple, excluding goodwill, of 2.5, "suggesting acquiring an interest in EZJ as an asset-play may be unattractive to it despite the fact that EZJ likely enjoys market-leading aircraft purchase discounts."
EasyJet's economic price-to-book value was estimated at nearer to 1.0, marking its own fleet to market, and AerCap had publicly confirmed it saw more value in buying back its own stock than purchasing aircraft at current market values, the analyst said.
Brexit was another potential stumbling block. AerCap was a Dutch/Irish concern and was technically free to invest in EasyJet today, the broker said.
Nonetheless, it risked falling afoul of updated foreign ownership restrictions for UK airlines, they believed.
In the same note Credit Suisse maintained its target price for EasyJet shares at 1,130p with a 'neutral' recommendation.