What GDA's revision in terms means to MAHB’s privatisation

Monday 20 Jan 2025

KUALA LUMPUR (Jan 20): Gateway Development Alliance Sdn Bhd (GDA), the consortium of three entities offering to take Malaysia Airports Holdings Bhd or MAHB (KL:AIRPORT) private at RM11 per share, revised one of the conditions for the offer.

It dropped the acceptance level to 85%, from the 90% stated in the offer document that was issued on Dec 6, 2024.

This privatisation that started in May last year, is at a crucial stage. This is because the entire exercise needs to be completed within 60 days of the offer. Which effectively means that GDA has another two weeks to get as many acceptances as possible in its bid to de-list and take MAHB private.

Q: What does the revision in GDA’s offer entails?

When GDA launched the offer on Dec 6, 2024, it came with several conditions. Among them was that the acceptance level should hit 90% before the offer becomes unconditional.

GDA also stated in the offer document that it reserves the right to revise the level of the conditionality to below 90%, an option the consortium exercised when it dropped the threshold to 85%.

By virtue of having achieved an acceptance level of 86.51% as of the latest announcement, GDA should be making an announcement soon that the offer is unconditional. The next update on the conditionality of the offer is on Jan 28.

Q: Is the 90% condition in GDA’s takeover offer part of the regulations in the takeover code?

No. The condition is self-imposed by GDA. In most takeovers, the offerors usually set the condition at 51%.

In the case of MAHB, GDA set a 90% threshold as part of the conditions to take over the company with the view of getting MAHB de-listed. But it has not been able to achieve the desired acceptance level so far, hence the revision in the threshold.

Q: If the takeover offer was unconditional, would it make any difference to the privatisation exercise?

Yes, it does. It adds certainty to the transaction. There is no turning back by GDA.

If the offer was conditional, GDA has the option to call off the privatisation exercise on the grounds that its condition of having 90% acceptance level is not met. If that happens, the shares to all those who have accepted the offer will be returned to their accounts with the Central Depository System (CDS).

On the other hand, if the offer becomes unconditional, GDA will need to pay RM11 per share to all those who have accepted the offer. It cannot back out from the deal. All those who have submitted the acceptance form, will get their money in a few days after the offer becomes unconditional.

GDA can also go to the market and buy up shares up to the price of RM11.

Q: Would GDA be able to de-list MAHB?

Prospects of a de-listing happens only if GDA is able to hit the 90% acceptance level.

Under the Bursa Malaysia regulations, companies must have a public free float of at least 25%. If the free float is less than 10%, which means that 90% of the shares are held by shareholders acting in concert, the shares will be suspended.

After attaining the 90% acceptance level, the company can apply for de-listing. The proposal will need the approval of shareholders, where it must be approved by 90% of shareholders and no more than 10% opposing the resolution.

In the case of MAHB, GDA has stated that it does not intend to maintain the listing status of the airport operator and plans to de-list the company.

Q: When would a privatisation happen?

A privatisation kicks in when GDA triggers the compulsory acquisition clause in the takeover code.

A compulsory acquisition happens when the offeror has reached acceptance to the level of 90% of the remaining shares that they do not own at the point of launching the takeover exercise.

In the case of GDA, it already had 41% of MAHB when it launched the offer.

There were 59% of shares in MAHB that it did not own. The compulsory acquisition clause will be triggered if it has acceptance of 90% of the remaining 59%.

Effectively, if GDA gets an acceptance of level of 94.1%, it can compulsorily acquire the rest of the shares in MAHB. Only then, the full privatisation of MAHB happens.

Edited ByKathy Fong

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