MEXICO CITY – Airline holding company Cintra SA said Wednesday it will likely list shares in Aeromexico on the Mexican stock market after having sold off its other main carrier, Mexicana.
“We are now free to raise money in the market,” Cintra chairman Andres Conesa said.
Government-run Cintra announced late Tuesday it has accepted a US$165.5 million (euro141.2 million) cash offer from Mexican hotel chain Grupo Posadas SA for Mexicana, the country’s second-biggest airline. Including debt that Posadas will assume and liabilities like airplane leasing agreements, the transaction values the carrier at US$1.46 billion (euro1.25 billion).
The Posadas offer for Mexicana was well above the base price set for the sale, Conesa said.
Shareholders are due to meet Dec. 16 to vote on the offer.
“By selling 100 percent of Mexicana, Cintra becomes Grupo AeroMexico,” Conesa said, explaining that Mexico’s antitrust commission forbade the holding company long ago from issuing more shares on the stock exchange since such a listing would have left the bulk of Mexico’s aviation industry vulnerable to acquisition by any stock investor.
Aeromexico is Mexico’s No. 1 carrier, and both companies control 67 percent of domestic air travel.
Cintra was created in the mid-1990s to manage Aeromexico and Mexicana, which had been rescued from financial problems by the government during Mexico’s bank crisis.
Credit Suisse First Boston managed the long-awaited privatization. Cintra opted not to sell AeroMexico, though, because one offer – also from Posadas – was for a 75 percent stake and the other was too low.
Mexico’s antitrust authority mandated that the carriers couldn’t be sold together. Cintra still hopes to sell Aeromexico at a later date. “There’s no reason for the state to own an airline,” Conesa said, adding that Aeromexico has a book value of US$220 million (euro188 million), excluding financial obligations and leasing agreements.
The other bidder in the process was Grupo Xtra, the holding company for Mexican pharmaceutical distributor Grupo Casa Saba SA.
Cintra class A shares fell 5 percent to 4.57 pesos on the Mexican bourse Wednesday afternoon as investors pondered the outcome of the sale.
Several analysts had calculated the value of the carriers at significantly higher levels, without including the cost of airplane leases. Some estimated Cintra’s total assets at US$1.4 billion (euro1.2 billion).
“There were a lot of people who reviewed the assets in detail, and this was the price they decided to pay,” Conesa said. “This (Mexicana) isn’t being sold on the cheap.” Cintra shares, which trade on the Mexican Stock Exchange, peaked at 8.79 pesos in late-August, when the company announced that 10 investor groups had requested information on the airlines.
Speculation about a possible failed sale sent the shares barreling lower after Nov. 21, when Cintra revealed that it had received just two offers for each of the airlines and that international carriers had pulled out.
International investors are limited to 25 percent stakes in Mexican airlines. Spanish travel group Globalia, which owns that country’s third-largest airline, had teamed up with Mexican hotel and hospital interest Grupo Angeles to get in on the sale.
Grupo Angeles, however, pulled out, leaving Globalia stranded.
In general, Conesa said most of the investors that backed out did so because of difficult conditions in the aviation industry.
Oil prices are high and competition is expected to increase for Mexican air travel as a handful of prominent local businessmen launch low-cost carriers.
Amy Guthrie is a correspondent of Dow Jones Newswires
