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23 October 2014

Transaction consolidates MAHB’s presence as an airport operator in Turkey and reinforces MAHB’s strategic position as a world class airport operator.

Malaysia, 23 October 2014 – Malaysia Airports Holdings Berhad (“MAHB”) is pleased to announce that it has exercised its right of first refusal (“ROFR”) to acquire from the Limak Group[1] the remaining 40% interest in ISG[2] and LGM[3] that it does not already own today.  

MAHB will shortly enter into a share purchase agreement (“SPA”) to acquire the Limak Group’s 40% interest in ISG and LGM for an aggregate cash consideration of up to EUR285 million (approximately MYR 1,180 million)[4]. The consideration is subject to downward adjustments in accordance with the SPA.  

MAHB, Limak and GMR had first formed a 20-40-40 consortium in 2008 for the development of the green field airport with the capacity of 25 million passengers. MAHB was the designated airport operator partner.  

MAHB, earlier this year, increased its interest in ISG and LGM from 20% to 60% when it acquired a 40% stake from GMR and obtained joint control with the Limak Group. MAHB will be the sole operator of Sabiha Airport[5] and will own 100% of ISG and LGM on successful close of the transaction which is expected in early 2015.  

MAHB is currently deliberating on the most appropriate funding structure for the acquisition and further details on the proposed funding will be announced once finalised. Notwithstanding this, MAHB will secure the necessary bridging facilities and/or drawdown its existing facilities to finance the acquisitions if needed.  

Transaction Rationale 

•       Increased exposure to an attractive asset with robust long-term growth potential 

•       Strengthen MAHB’s presence as an airport operator in Turkey and Europe 

•       Diversification of future earnings 

•       Reinforce MAHB’s position as a world class airport operator 

 Datuk Badlisham Bin Ghazali, Managing Director of MAHB said, “The successful acquisition of ISG and LGM is a significant milestone for MAHB. This acquisition gives MAHB access to an attractive offshore asset and will enhance MAHB’s presence in Turkey. Furthermore, it is testament to our confidence in the continued great performance of our Turkish management team in ISG and our commitment to this strategic investment. Going forward we expect that the combined operations of ISG and LGM together with MAHB will be further enhanced.”   

Although MAHB will gain full ownership of the airport, the existing management structure will not change and the airport will continue to be managed by the existing Turkish leadership team that will report to the ISG Board as usual. Originally, MAHB had participated closely and led on the planning of the flows in the new terminal, the transfer of operations from the old to the new terminal and seconded its staff as key operations personnel. However, once operations stabilized and outstanding Turkish professionals were hired and trained, MAHB had brought back its staff.

ISG has been the fastest growing airport in Europe since it opened its new terminal in November 2009 in terms of growth rate of number of passengers. ISG has also consistently won awards for being the Best Airport in Europe as voted by Low Cost Carriers including in 2013. MAHB’s acquisition will further accelerate the airport’s strong performance given the strong expertise of the company in servicing both low-cost airlines and full-service airlines. In addition to this, the agreement will help contribute to a platform for direct connections between Turkish and Malaysian capital markets & economies.

Gokhan Bugday, CEO of ISG, stated: “We are delighted with the decision of MAHB to acquire this remaining stake in ISG. Our partnership so far has been very successful and I am confident that together we will make ISG an international success story.” Bugday also underlined the fact that ISG has experienced growth of 29% in the first nine months of 2014, carrying over 22 million passengers in the last twelve months. With the acquisition of the airport by MAHB, the prospects for ISG indeed look bright.

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