American International Group Inc or AIG said it will be exiting International Lease Finance Corp or ILFC to AerCap Holdings in a $5 billion deal after a consortium of Chinese firms were not able to buy the firm by the due date, Bloomberg reported. The companies said the deal will have AerCap acquiring the second largest aircraft lessor in the world for $3 billion in cash and 97.6 million of its shares. The transaction is scheduled to be completed in the second quarter with AerCap having control of the merged firm. AIG will retain a 46% stake, the report said.

Netherlands-based AerCap was selected by the US-based insurer AIG after Hong Kong-based P3 Investments and other investors were not able to deliver the amount of $4.2 billion to acquire an 80% stake in the aircraft leasing firm. The report said AIG has been looking to narrow its focus as large financial companies have become the subject of closer scrutiny by government regulators.

In a telephone interview with Bloomberg, the report quoted AerCap Chief Executive Officer Aengus Kelly, who said, "We're creating the industry leader here. We'll have the premium order book in the industry that'll fuel the future growth in the business."

Kelly said $2.75 billion in financing will come from UBS AG and Citigroup Inc. The report also said that cash will be used to pay for the acquisition which is valued at $26 billion, which includes the assumption of ILFC debt worth $21 billion. Kelly added that they do not plan to dispose of planes to come up with the funds, the report said.

The joint statement from both firms also said that an unsecured revolving credit facility worth $1 billion will also be provided by AIG to AerCap. The stake of AIG will also be subject to a phased lock-up period of anywhere from 9 to 15 months, the report said.