PETALING JAYA: The timeline deferment of the takeover offer from Gateway Development Alliance (GDA) of Malaysia Airports Holdings Bhd
(MAHB) has thrown up further permutations, although analysts are sticking to their recommendation that shareholders accept the deal on the table as it is.
The closing date of the offer has been extended from Jan 8 to 5pm on Jan 17.
MAHB itself has indicated through a Bursa Malaysia filing on Monday that the Khazanah Nasional Bhd-led GDA and its associates – namely Pantai Panorama Sdn Bhd, Kwasa Aktif Sdn Bhd and GIP Aurea Pte Ltd – has reached a 75.73% holdings in MAHB, from 40.85% equity the consortium held of the airport operating group on Dec 6.
In that tone, it would appear as though the deal is looking increasingly likely to go through.
MIDF Research, in a brief note published to clients following the equity update by MAHB, reiterated its stance that shareholders accept the offer of RM11 per share, pointing out that the price reflects an 18% premium over the research unit’s discounted cash flow-derived fair value of RM9.32.
The research house added that the offer price represents a substantial premium of 125% over the latest unaudited net asset per share of RM4.89 as at the end of the third quarter of 2024.
Head of equity sales at Rakuten Trade, Vincent Lau, echoed the sentiment of MIDF Research, believing that signs are pointing to a successful completion of the GDA takeover, although he acknowledged that shareholders that are holding out may still be hoping for a revision in the offer price.
Maintaining a cautious stance, he said: “Time will tell whether the privatisation exercise will lead to further improvements in efficiency and profitability for the group.”
Lau’s comment was addressing concerns from non-independent directors of MAHB who were not convinced that privatisation would lead to markedly better results for the airport operator, given that its recovery appeared to already be going full steam ahead.
“On the other hand, there is also always the possibility that a company can be publicly listed again despite having been taken private,” he told StarBiz.
Furthermore, he pointed out that the privatisation of MAHB will free up liquidity for the broader market and that other listed companies would be able to benefit and raise funds.
Interestingly, portfolio manager at Tradeview Capital Ng Tzyy Loon observed the fact that GDA had extended the offer acceptance to Jan 17 with the knowledge that they have yet to meet the 90% threshold, which is the condition of its voluntary offer.
“If GDA fails to achieve the 90% threshold, they can apply to lower it down or raise their offer price.
“Hence, investors need to pay attention between two dates, which is from Jan 8 until Jan 15 to know the latest status of the acceptance of the offer,” he reckoned.
Ng ventured that if GDA is not able to achieve the ideal acceptance rate, regardless of change of offering price, then there is a possibility that the offer may fall through.
“However, considering how important it is for MAHB to get a facelift and other upgrades to keep up with global competition, it is unimaginable for GDA to walk out from the deal.
“If investors have already accepted the offer and GDA subsequently increases the offer price, they will be asked again for the new offering price,” he said.
Meanwhile, seasoned investor Ian Yoong noted that the GDA offer represented an attractive arbitrage opportunity for investors, provided they are willing to make an investment into MAHB before the conditional 90% shareholder acceptance of the deal is achieved by the closing date.
“Investors can buy (MAHB shares) at the current price of RM10.66; accept the offer at RM11, and potentially earn an annualised return of about 12% to 14%, provided of course the offer achieves the conditional acceptance. It is a heads I win, tails you lose situation,” he said.
He added that GDA could also consider increasing the takeover price if the acceptance plus shares it currently owns is below 90%, but this would mean for investors to not accept the current RM11 offer.
On the other hand, a source said investors who hold on to their shares may wait for a possible relisting of MAHB, which of course could mean they can then liquidate their holdings at a higher price.
Yoong appears to resonate with this possibility, reporting that his fair valuation of MAHB shares is priced between RM13.50 to RM14 each.
“This is before improvements to its operations. There is a lot of room for improvement and therefore value creation in acquiring MAHB. The target return of private equity funds when they acquire businesses is 80% to 120% over five years,” he said.
Tradeview Capital’s Ng said shareholders have every right to wait for a re-listing, in the face of two main risks: “Nobody knows how long they will have to wait and minority shareholders could be outnumbered by GDA easily in major decisions, causing their interest to be diluted.”
Concurrently, MIDF Research is expecting MAHB to undertake substantial capital expenditure in the coming years for airport expansion and development as the latter gears up to meet growing passenger traffic demand, which in turn may lead to a longer gestation period for earnings, coupled with ongoing considerations around the regulatory framework.
“As of now, details regarding the regulatory framework for the second regulatory period, beginning Jan 1 2027, including the transition to a cost-based approach for determining aviation service charges, have not yet been outlined,” it added.
Malaysia operations contribute to at least 70% of the airport manager’s profits, and while there is an expected preliminary full recovery in passenger traffic this year, with projected growth of 4% compared to 2019 levels, the research house cautioned this is subject to key downside risks, including delays in AirAsia Malaysia’s fleet reactivation, potential disruptions in aircraft deliveries and ongoing supply chain challenges.
MAHB’s share price closed 16 sen higher to RM10.64 at 5PM yesterday.
