KUALA LUMPUR (Dec 20): Hong Leong Investment Bank (HLIB) has concluded that the RM11 per share takeover offer for Malaysia Airports Holdings Bhd (KL:AIRPORT) from the consortium led by Khazanah Nasional Bhd and the Employees Provident Fund (EPF) is not fair.
But it deemed the offer reasonable in the absence of a competing offer and advised shareholders of Malaysia Airports, also known as MAHB, to accept the offer, as it represents a chance for them to realise their investments, according to its circular to shareholders filed to Bursa Malaysia on Friday. HLIB was appointed as independent adviser to assess the deal.
HLIB deemed the offer as unfair as it represents a 12.77%-19.77% discount to their estimated fair value of between RM12.61 and RM13.71 per MAHB share, based on a sum-of-the-parts valuation. Nevertheless, the offer price of RM11 represents a premium of RM6.11 or 124.95% to MAHB’s latest unaudited net asset per share of RM4.89 as at Sept 30, it noted.
Non-interested directors, however, do not agree with HLIB’s recommendation as they found the offer both unfair and unreasonable, and have advised that shareholders reject it instead.
The non-interested directors are: Datuk Mohamad Husin, Ramanathan Sathiamutty, Cheryl Khor Hui Peng, Datuk Seri Koe Peng Kang, and Chris Chia Woon Liat.
Like HLIB, they believe the offer is not fair, as it represents a substantial discount compared to MAHB’s estimated value per share.
Beyond valuation, they strongly believe the offer is not reasonable due to MAHB’s current growth trajectory and future prospects, with its ongoing and planned initiatives for development.
A key consideration is the new operating agreements that MAHB has secured from the government that extends MAHB’s concession for the management of 39 airports across the country until 2069, with capital recovery mechanisms that enable significant investments in capacity expansion at key airports. MAHB has also accelerated off-terminal initiatives, such as the KLIA Aeropolis and Subang Airport Regeneration Plan, with major projects already underway.
The directors also pointed to MAHB’s strong post-Covid-19 recovery, as seen in the rebound of passenger traffic at its airports.
They are also concerned that the delisting of MAHB would reduce its transparency, accountability, and ability to raise capital from public markets.
Given MAHB’s positive financial momentum, clear growth strategy, and the potential for future value accretion if the shares remain publicly traded, the directors find no compelling reasons for shareholders to accept an offer that they believe does not adequately reflect MAHB’s full potential.
The consortium and its related companies currently hold a collective 41.1% in MAHB. If the takeover first announced in May is successful, the Malaysian members of the consortium will own 70% in MAHB, while foreign partners of the consortium — Abu Dhabi Investment Authority and Global Infrastructure Partners — will have the remaining 30%.
The formal offer was made in November, after the consortium fulfilled all pre-conditions for the deal, including receiving approvals from relevant authorities in Türkiye, Saudi Arabia, Egypt, and Malaysia.
The success of the offer is contingent on the consortium acquiring at least 90% of MAHB's issued share capital, which will allow it to have the airport operator be delisted from Bursa Malaysia.
Shareholders now have until Jan 8, 2025, to decide on the offer.
At time of writing, MAHB’s shares were down six sen at RM10.58, valuing the group at RM17.65 billion.