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Shareholder Malaysia Airports expresses doubts about takeover bid

(Bloomberg) – Northcape Capital Ltd. said a bid by major shareholders to buy Malaysia Airports Holdings Bhd. taking it private could face opposition due to the low valuation offered.

“They may need to reconsider the offer,” said Ross Cameron, portfolio manager at Northcape, which owns a 1.7% stake in the airport group. “This offer was opportunistic,” and there is a risk that stakeholders will not reach the 90% threshold needed to take the company private, he said.

One by Khazanah Nasional Bhd. led consortium announced on May 15 an offer for the shares of Malaysia Airports it does not already own, at 11 ringgit each. The move comes as revised concession terms and expanded operating agreements provide better visibility into the airport operator’s revenues.

The offer, made in partnership with the Employees Provident Fund, Global Infrastructure Partners and Abu Dhabi Investment Authority, values ​​the company at 18.4 billion ringgit ($3.9 billion). Malaysia Airports shares have fallen about 3% since May 14, just before the offer was announced, bringing year-to-date gains to 37%.

Northcape is an Australian boutique fund manager specializing in equities, with assets under management of approximately $8 billion, according to its website. The fund is active in the aviation sector and owns interests in Qantas Airways Ltd. and an airport in Mexico, Cameron said. It used to have shares in the now defunct Sydney Airport.

Analysts have mainly recommended that investors accept the buyout offer. The deal is fairly valued given that Malaysia Airports’ share price has risen over the past six months as minority shareholders have “positioned themselves early”, said Macquarie Capital Securities analyst Max Koh.

Some may choose to hold off for a better price. Of recent transactions in the region involving infrastructure assets, the $17 billion sale of Sydney Airport in 2021 was only completed after two previous bids were rejected.

“The transaction would eventually materialize,” said Mohit Mirpuri, fund manager at Singapore-based SGMC Capital Pte. “It just might take longer than they expected.”

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