KUALA LUMPUR: The proposed business merger of Capital A International with a US-based special purpose scquisition company (SPAC) is one component of Capital A Bhd's larger strategy to address and uplift its PN17 status.
MIDF Research said this presents an avenue for the group to unlock the value of the AirAsia brand.
"It will also provide the group with exposure to the US capital markets via Nasdaq, which are generally known to be more receptive to financial endeavours of this nature," it said in a note.
Capital A on Wednesday announced that it had entered into a letter of intent (LOI) with Aetherium Acquisition Corp, a SPAC listed on the Nasdaq stock exchange, for the proposed business merger.
This would result in Capital A International becoming a standalone publicly traded company in the United States.
The expected impact of the proposed business combination will be disclosed in a detailed announcement when the definitive agreement is signed tentatively in the first quarter of calendar year 2024 (1QCY24).
After the proposed business combination is finalised, MIDF Research said the firm is anticipating a pro forma gain from the merger.
This should improve Capital A's shareholders' equity which stood at -RM10.20 billion as of Q2 FY23.
"Moreover, post the completion of the merger, the group will have the opportunity for indirect participation in the profits of the disposed business through its ownership of consideration shares and consideration securities.
"We made no changes to our earnings estimates. We maintain Neutral on the stock with unchanged target price of 90 sen," it added.