Capital A Berhad and AirAsia Group Sdn Bhd have officially sealed a conditional sale and purchase agreement, marking a significant milestone in the restructuring of Capital A’s aviation business. Under the terms of the agreement, AirAsia Group will acquire Capital A’s airline business, paving the way for AirAsia to embark on its next phase of growth with aspirations to become the world’s pioneering low-cost network carrier.
The agreement, endorsed by the boards of both Capital A and AirAsia X, involves a multi-faceted transaction. Firstly, AirAsia will acquire AirAsia Aviation Group Limited (AAAGL), encompassing AirAsia subsidiaries in Thailand, Indonesia, the Philippines, and Cambodia, through the issuance of new AirAsia Group shares valued at RM3 billion. Subsequently, Capital A will distribute RM2.2 billion worth of these newly issued shares to its shareholders, maintaining an 18.39% stake in the expanded AirAsia Group.
Secondly, AirAsia Group will acquire AirAsia Berhad, commonly known as AirAsia Malaysia, for RM3.8 billion, offsetting it with the assumption of RM3.8 billion of debt owed by Capital A to AirAsia Berhad.
This strategic move is anticipated to unlock substantial value for shareholders on both sides. Prior to the transaction’s completion, AirAsia X’s shares and listing status will be transferred to AirAsia Group, consolidating the corporate structure into an enlarged aviation entity. Shareholders will be granted free warrants as a gesture of appreciation for their support, allowing them to enhance their equity participation and contribute to the future growth of the combined aviation business.
“Today’s announcement is more than just a transaction, but a unique and time-sensitive opportunity to elevate our aviation business to the next level, while driving growth and profitability across core non-airline business portfolios for Capital A. The divestment facilitates clear distinction between Capital A’s main portfolios of businesses – the aviation group, digital businesses, and logistics plus aviation services to optimise synergies across entities and unlock greater value for all stakeholders,” according to Tony Fernandes, CEO of Capital A and Advisor to the newly formed AirAsia Aviation Group.
To reinforce AirAsia Group’s financial position and enhance the shareholder base and trading liquidity, a private placement is also proposed. For AirAsia X shareholders, this transaction offers access to a realized value of RM6.8 billion through new shares issuance, granting them ownership in a robust airline operation spanning four established airlines across ASEAN.
Meanwhile, Capital A shareholders stand to benefit significantly from the divestment, unlocking RM6.8 billion in value from the aviation business, more than doubling the current market capitalization of the group. Following the divestment and distribution-in-specie of AirAsia Group shares, Capital A shareholders will retain direct ownership in the combined aviation businesses, ensuring access to future growth opportunities.
Post-divestment, Capital A will maintain ownership of four high-growth, aviation-focused core businesses, including Capital A Aviation Services, Teleport, MOVE Digital, and Capital A International, poised for sustained growth and diversification.
Capital A, formerly AirAsia Group, operates as an investment holding company with a portfolio of aviation and travel businesses leveraging data and technology. Its vision is to deliver value-driven products and services underpinned by robust data and one of Asia’s leading brands, serving the underserved in ASEAN and beyond.
AirAsia Group, the newly established entity set to become the holding company of AirAsia X Berhad, aims to execute AirAsia’s “One Airline” strategy, striving to become the world’s first low-cost network carrier, integrating four short-haul airlines and a medium-haul airline under its banner.