Dublin Airport Authority will receive a €305 million windfall by selling its 24.125 per cent shareholding in Birmingham airport, writes Ciaran Hancock, Business Affairs Correspondent.
Aer Rianta International, a subsidiary of DAA, and Macquarie Airports Group have agreed to sell their combined 48.25 per cent stake in Birmingham to a company called Airport Group Investments (AGI) for a combined £420 million.
DAA, which was advised by IBI Corporate Finance, would receive £210 million as its share.
AGI is a consortium comprising the Ontario Teachers' Pension Plan Board in Canada and the Melbourne-based Victorian Funds Management Corporation.
The deal will not close for at least three months, as the seven West Midlands district councils, which own 49 per cent of the equity in Birmingham, have pre-emption rights. It is not clear if the councils will exercise these rights. If they do, they will have to pay the same amount as is currently offered by AGI although, under the terms of the shareholder agreement, they are not required to purchase the entire shareholding held by DAA and Macquarie.
The deal would represent an excellent piece of business for DAA, which first took a stake in Birmingham in 1997 and then topped it up in 2000.
In total, the Irish airport manager has spent about €34 million acquiring its shareholding. It is understood it has received at least that much back in dividend payments in the intervening period.
The deal represents 20 times Birmingham's projected earnings before interest, tax, depreciation and amortisation for the year to March 2008. This reflects the high valuations currently being placed on British airport assets.
Birmingham carries about nine million passengers a year and 50 airlines use its facilities.
DAA is expected to use the windfall to help fund its €2 billion, 10-year redevelopment programme for Dublin airport.
Other calls might also be made on the money. Cork airport is pressing the Government to honour a commitment given to it at the time that Aer Rianta was broken up that its debt would be assumed by DAA. This could cost the authority €220 million.
In addition, the DAA has to fund a €36 million redundancy programme at Shannon airport.
The decision to offload the Birmingham shareholding was driven by a change in strategy by Macquarie, an Australia-based investment bank. Macquarie approached DAA last year with a view to selling their combined stake. The two sides announced their intention to sell on January 15th.
If the sale proceeds, Dusseldorf airport would represent the DAA's only overseas equity holding. The Irish company owns 20 per cent of the German airport.
The windfall will have no bearing on the aviation regulator's deliberations on a proposed increase in passenger charges for Dublin, which will be published on Monday. The Birmingham deal does not fall under the regulator's scope for deciding airport charges for Dublin.
