KUALA LUMPUR: Turkish Airlines is bidding to buy a majority stake in Istanbul’s second airport from Malaysia Airports Holdings Bhd, a deal analysts said will raise the much-needed funds for the airport operator’s domestic expansion.
Bloomberg, quoting people with knowledge of the matter, said Turk Hava Yollari AO, as the airline is formally known, could buy 80 per cent of Istanbul Sabiha Gokcen International Airport, also known as ISG.
Turkish Airlines offered €750 million (US$865 million) for the stake.
The wire service said Turkish Airlines did not immediately respond to requests for comment on the deal, while MAHB declined to comment.
Malaysia Airports was part of a consortium that won a €1.9 billion (US$2.2 billion) contract to operate the airport in 2007.
In 2013, it agreed to raise its holding in ISG to 60 per cent by acquiring a 40 percent stake held by Indian partner GMR Infrastructure Ltd for €225 million.
It bought the remaining 40 per cent from Turkey’s Limak Holding in 2014 for €285 million.
Analysts said the possible sale would raise the much-needed funds for MAHB to undertake its long-awaited assets expansion in Malaysia.
Maybank Investment Bank Bhd aviation analyst Mohshin Aziz said MAHB had always been trying to dispose ISG if the price was right.
“If the deal is true, the (purported) price is very good as it is a premium over MAHB’s own valuation of earnings before interest, taxes, depreciation, and amortisation,” he told NST Business today.
Mohshin said MAHB could gain a net proceed of €366 million (RM1.71 billion) from the disposal, based on ISG’s net book value of €460 million (RM2.15 billion) in MAHB’s 2017 annual report.
“The price is attractive. With the proceeds, MAHB can use it to develop its airports infrastructure in Malaysia including the main terminal of Kuala Lumpur International Airport, Penang International Airport and Langkawi International Airport,” he added.
Mohshin said there would be zero impact on MAHB if the deal did not materialise, adding that ISG was a long-term potential airport with year-on-year incremental growth.
Asian transport equity research firm Crucial Perspective chief executive officer Corrine Png said disposing a majority stake would command a higher valuation given the control premium than selling a minority stake.
“Investors are likely to welcome this move as ISG has been an earnings drag for MAHB as it requires large capital requirements.
“It would be a good opportunity to unlock value through this divestment for MAHB investors,” she said.
MAHB former managing director Datuk Badlisham Ghazali previously said the company was evaluating its strategic partners, citing that the asset was attractive with high valuation and the concession valid until 2034.
He said ISG was encouraged by international growth with international travel starting to gain its traction.
“That is attractive proposition for us, travelling passengers and airlines as well as investors,” he reportedly said.