AirAsia ups stake in Think BIG

KUALA LUMPUR (Feb 3): AirAsia Bhd is increasing its stake in Think BIG Digital Sdn Bhd (Think BIG) to 71.9%, from 46.1% currently, after acquiring a 25.8% stake from its affiliate Tune Money International Sdn Bhd (TMI) for RM101.5 million or RM49 per share.
In a filing with Bursa Malaysia, AirAsia said it has entered into a share sale agreement with TMI to acquire 2.07 million shares, representing 25.8% of the issued and paid-up share capital of Think BIG, which will be satisfied via the company’s internally-available funds.
The budget carrier said its increased stake in Think BIG would improve AirAsia’s topline and promises high returns on investment.
“Additionally, once AirAsia increases its stake in Think BIG to above 50%, Think BIG will no longer be classified as an associate and AirAsia will be able to consolidate Think BIG contributions to Company revenue, which would improve AirAsia’s top line,” the filing read.
“(Think BIG has a) high return on investment, as the company has a business plan to grow its loyalty business and membership base significantly,” it added.
AirAsia said a higher stake in Think BIG would also accord it with greater strategic control over the day-to-day operations of Think BIG, the owner and operator of AirAsia’s BIG loyalty programme.
AirAsia said greater control would also accelerate decision-making with regards to AirAsia priority items that would help support the Company’s business plan and commercial objectives.
“Acquiring the remaining 25.8% stake in Think BIG Digital will confer onto AirAsia additional benefits that can only be realised through greater controlling stake of Think BIG Digital.
“This would allow AirAsia to extract greater value from the AirAsia BIG loyalty programme, managed by Think BIG Digital,” it added.
The transaction is a related party transaction, as two of TMI’s shareholders and directors, Tan Sri Anthony Fernandes and Datuk Kamarudin Meranun, who is also AirAsia executive chairman, are shareholders and directors in AirAsia.
Both hold a 35% stake each in TMI and a 19% indirect stake each in AirAsia. AIMIA Holdings UK II Ltd holds a 17% stake in Think BIG.
AirAsia said upon acquisition, TMI’s stake will be reduced to 11.1%.
AirAsia also said the purchase price is based on the agreed valuation of Think BIG’s 100% equity at RM393.4 million, with the valuation taking into account the previous share acquisition and subscription in Think BIG by AIMIA in 2014, which valued the company at US$109 million (RM459.82 million).
The transaction is expected to contribute positively to the earnings and cashflow of AirAsia in the future, through its shareholding in Think BIG, AirAsia said.
However, it will not have an effect on the audited consolidated NA per share or the consolidated gearing of AirAsia for the financial year ending Dec 31, 2016, and AirAsia will not be assuming any of Think BIG's liabilities.
AirAsia closed 4 sen or 2.82% lower at RM1.38 today, for a market capitalisation of RM3.84 billion.
http://www.theedgemarkets.com/my/article/airasia-ups-stake-think-big