Privatisation of MAHB

The joint offerors, which consist of Khazanah, EPF and GIP Aurea (GIP), intend to undertake a conditional voluntary take-over offer to acquire all the remaining 1,118mn shares in Malaysia Airport (MAHB) not already held by them for a cash offer of RM11/share, subject to and contingent upon the satisfaction or waiver of the pre-conditions.

The pre-conditions are:

1. The receipt of a non-infringement decision from MAVCOM;

2. The receipt of a non-infringement decision from the Turkish Competition Authority;

3. Merger control approval from the General Authority for Competition Saudi Arabia;

4. Merger control approval from the Egyptian Competition Authority;

5. Application to the SC to seeks its consent for the Offer to be announced subject to the pre-conditions.

In the event that the pre-conditions are not satisfied before the long-stop date (i.e.: 15 November 2024), the formal offer will not be made.

Effective Stake in MAHB

Gateway Development Alliance (GDA), an indirect wholly-owned subsidiary of Khazanah, will be used to facilitate the deal. Upon satisfaction of all the preconditions, the effective economic interest stake of offerors in GDA and MAHB would be as follow:

Our View

Based on the offer price of RM11/share, the implied acquisition PE works out to an exorbitant 37.7x FY23 EPS. Also, the offer is 3.8% higher than our DCF valuation of RM10.60/share, which we think is a good deal for minority shareholders to accept.

As announced, the offerors have no intention to maintain the listing status of MAHB when a formal offer is made. As such, the offer is conditional on an acceptance rate of not less than 90%, which we believe is attainable as the offer price of RM11/share is fixed at all-time high levels. In addition, we see a slim chance of union protest as the offerors have confirmed that there are no plans for layoffs.

Forecast

No Change to Our FY24-26 Forecasts.

Valuation

We revise MAHB’s far value to RM11.00 (from RM10.60), matching the general offer in the making. We advise investors to accept the offer and switch to another concessionaire, i.e. Westports for stable concession earnings and consistent dividend payments. ACCEPT THE OFFER

Source: TA Research - 16 May 2024