Consortium led by Khazanah and EPF announces conditional takeover offer for MAHB

KUALA LUMPUR, May 15 — Gateway Development Alliance (GDA) and its shareholders have today announced a pre-conditional voluntary offer to acquire all the shares in Malaysia Airports Holdings Bhd (MAHB) not already owned by the Consortium, at an offer price of RM11.00 per share which is an equivalent of RM18.4 billion.

The Consortium is led by two Malaysian Government Linked Investment Companies – Khazanah Nasional Bhd via its wholly owned subsidiary UEM Group Bhd and the Employees Provident Fund (EPF).

The Consortium’s shareholders also comprise a wholly owned subsidiary of the Abu Dhabi Investment Authority (ADIA) and funds managed by Global Infrastructure Partners (GIP), one of the world’s premier infrastructure investors and an experienced airport owner and manager, according to a joint statement by the shareholders of GDA.

Upon full completion of the offer, Khazanah will be increasing its ownership in MAHB from 33.2 per cent to 40 per cent and EPF from 7.9 per cent to 30 per cent.

Collectively, Malaysian investors would own 70 per cent of MAHB. ADIA and GIP will hold the remaining 30 per cent. The government of Malaysia will retain special share rights in MAHB and the chairman and CEO will continue to be Malaysian citizens.

“Malaysia is strategically well located in the fast-growing Southeast Asian aviation market and has the potential to strengthen its long-haul and regional network,” Khazanah managing director Datuk Amirul Feisal Wan Zahir said in the statement.

“We are optimistic that the combined efforts of MAHB’s dedicated employees and the collective expertise of the Consortium would catalyse MAHB as a leading international airport operator, and stimulate economic growth through its airport network, in line with Khazanah’s goal of Advancing Malaysia,” he said.

The offer price of RM11.00 implies an equity value of RM18.4 billion, which translates to a price-to earnings ratio of 37.7x MAHB’s audited consolidated earnings per share for the financial year ended Dec 31, 2023.

The offer price represents a 15.2 per cent premium to the prevailing three-month volume-weighted average price (VWAP) of RM9.55 per share and also implies a 49.5 per cent year to date (YTD) increase based on the closing price of RM7.36 per share on Dec 29, 2023, in comparison to the 10.4 per cent YTD performance of the benchmark index FTSE Bursa Malaysia KLCI up to the date prior to the announcement of the offer.

If, on or after the date of this announcement and prior to completion of the offer, any dividend, distribution or other return of value is declared, made or paid by MAHB, the offer price shall be reduced accordingly.

In such circumstances, MAHB shareholders would be entitled to retain any such dividend, distribution or other return of value declared, made or paid, it said.

EPF chief executive officer Ahmad Zulqarnain Onn said the EPF views this offer as an investment opportunity that aligns with our investment objectives and commitment to bolster domestic investments.

“As an integral component of the national infrastructure, MAHB plays a vital role as a gateway for trade, tourism and business activities, contributing significantly to economic development and prosperity.”

“We look forward to the success of this strategic partnership by delivering best-in-class airport experience for the flying passengers, partner airlines and MAHB employees. We expect this investment to bring positive benefits to EPF’s members and the public, thereby contributing significantly to Malaysia’s sustainable growth agenda.”

ADIA’s executive director of the Infrastructure Department Khadem Alremeithi, said: “MAHB’s airport network serves some of the world’s fastest growing aviation markets, which are benefitting from regional economic growth, increased air travel affordability and shifts in consumer spending. This positive backdrop underpins our participation in the Consortium, which combines strong local partners with extensive international expertise.”

GIP chairman and chief executive officer Bayo Ogunlesi said: “We are delighted to partner with Khazanah, EPF and ADIA, with whom we have strong and productive strategic relationships, as part of this offer for MAHB.”

“Given GIP’s substantial expertise in owning and operating airports, together with our partners, we can focus on improving customer service, elevating operational excellence, growing passenger volumes and enhancing employee engagement. We look forward to working with our partners to build a bright future for Malaysia, MAHB and all stakeholders.”

The Consortium believes that these objectives will be best achieved by MAHB as a private entity, taking a long-term approach to decision-making and capital investment and benefitting from international technical expertise.

The Consortium recognises MAHB’s potential and is committed to:

*Supporting MAHB to deliver high priority capital projects, including the Aerotrain and the Baggage Handling System at KLIA;

*Enhancing the passenger experience by alleviating congestion, improving passenger flows and terminal ambience, and expanding the retail and food and beverage offering at MAHB’s airports;

*Working closely to support existing airlines and strengthening management resources to attract new airline customers to MAHB, particularly in the long-haul segment;

*Maintaining the highest level of safety for passengers and employees;

*Accelerating capital investment to repair and maintain the existing infrastructure and equipment;

*Upgrading and harmonising operational service standards across MAHB’s state airports;

*Planning long-term investment to grow airport capacity throughout MAHB’s network of airports in Malaysia and Türkiye; and

*Partnering with state bodies and local businesses, to develop ancillary businesses around the airports

The Consortium said it is confident that these initiatives will support MAHB’s efforts to become a world-class airport operator and looks forward to working with MAHB’s management and its employees to implement them.

The Consortium confirms that there are no plans for layoffs as a result of the offer and that existing employment rights will be fully safeguarded. There will also be no changes to the passenger service charge rates published by Malaysia Aviation Commission on March 12, 2024.

The Consortium is committed to MAHB’s airport operations and improving service levels at Istanbul Sabiha Gökçen in Türkiye.

The making of a formal offer for MAHB is subject to certain pre-conditions and, when made, will be subject to the Consortium owning at least 90 per cent of MAHB’s issued share capital.

If such conditions are met, it is expected that MAHB’s shares would de-list from Bursa Malaysia upon completion of the offer, which is estimated to occur in the fourth quarter of this year, it said.

MAHB was last traded at RM10.40 per share.

Presently, MAHB manages 39 airports throughout Malaysia, including five international airports, 17 domestic airports and 17 STOLports (Short Take-Off and Landing). Additionally, it owns and manages one international airport in Istanbul, Turkiye. — Bernama