This article first appeared in The Edge Malaysia Weekly on May 20, 2024 - May 26, 2024

Malaysia Airports Holdings Bhd’s (MAHB) (KL:AIRPORT) share price dropped to RM10 the day after it received a pre-conditional voluntary takeover offer of RM11 per share.

The stock was trading below the offer price for two trading days since the announcement. The share price trend reflects the scepticism about the success of the potential takeover.

The voluntary general offer was made by MAHB’s majority shareholder, Khazanah Nasional Bhd, together with the Employees Provident Fund (EPF), New York-based Global Infrastructure Partners (GIP) and Abu Dhabi Investment Authority (ADIA).

The consortium, which is called Gateway Development Alliance Sdn Bhd (GDA), is proposing to acquire the remaining 1.12 billion MAHB shares not held by them, representing about a 67.01% stake, and take the airport operator private.

Upon completion, the consortium will wholly own MAHB. Khazanah will be the single largest shareholder with a 40% stake in GDA, while EPF and GIP Aurea (a joint venture of GIP and ADIA) will have a 30% stake each. GIP, which has track record of turning around a number of international airports, will have an effective 25% stake in MAHB via its 83.3% equity interest in a joint venture with ADIA.

The takeover of MAHB is aimed at upgrading and modernising the company’s operations, enhancing passenger service, improving airline connectivity and stimulating traffic growth, the joint offerors said on the rationale for the takeover. The takeover offer has sparked debate mainly because foreigners will partly own and have a say in the running of the strategic national asset.

Politics aside, KLIA’s ranking as Asia’s eighth worst airport has raised the alarm, reflecting the deteriorating service quality and poor conditions of its facilities and amenities. The airports in elsewhere in Malaysia are not any better, if not worse.

KLIA was Malaysians’ pride when it commenced operations in 1998. Unfortunately, it is more often an embarrassment now given that it is ranked by business travellers as the eighth worst airport in Asia. The breakdown of the aerotrain made it hard for Malaysians convince ourselves that our airport is top-notch.

But can’t the locals revamp KLIA? MAHB has been given over 20 years to prove itself. It is long enough time. One might recall Khazanah’s sale of its strategic stake in national car maker Proton Holdings Bhd to Geely. The sales of Proton’s SUV X70 say it all when it comes to that decision.

We need to raise the bar and make sure that all airports, not only KLIA, are functional as well as providing comfort and convenience to passengers. Airports are critical infrastructure. Dubai is a good example. It helps to drive tourism and foreign investments. We cannot afford to have “first class infrastructure but third class maintenance” any longer.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.