TAV Holding - ADP to acquire 38% stake in TAV Holding

ADP to acquire 38% stake in TAV Holding

Aeroports de Paris (ADP PA, Not rated) has announced that it will sign a share purchase agreement to acquire a 38% stake in TAV Holding for USD874m, corresponding to a price of USD2.3b for the company. The transaction is to be realised at TRY11.25/share, 32% higher than the stock’s latest closing price of TRY8.54.

Sales process finalised at a price slightly above expectations
The two current major shareholders, Tepe and Akfen (AKFEN TI, Not rated), will sell 18% each and the remaining 2% will be sold by Sera Yapı, owned by Sani Senel, the executive director of TAV Holding. As the ownership of ADP will not exceed 50%, the transaction should not trigger a minority tender call.

We stick to our TRY9.74 target price and BUY rating
Absence of a minority tender call could hurt the sentiment on the stock. However, we stick to our BUY rating, as strong traffic growth of Ataturk Airport and solid cash generation should remain major catalysts for the stock to run. We employ a net asset value (NAV) methodology to derive our target price for TAV.

Due to high operating leverage and time constraints in the ownership of concession, future income projections and valuation estimates are highly sensitive to growth rates. Air passenger traffic is highly susceptible to economic downturns, geopolitical risks, natural disasters and major disease outbreaks.