Aimia rejects US$180 million Grupo Aeromexico offer for PLM stake
Air Canada and three financial firms made an unsolicited $2.25-billion offer to buy the Aeroplan loyalty business from Aimia Inc.
Armina Ligaya, The Canadian Press
Published Thursday, July 26, 2018 1:41PM EDT
Aimia Inc. has rejected an unsolicited US$180-million offer by Mexican airline operator Grupo Aeromexico to buy the Montreal-based company's stake in their joint loyalty program PLM.
The proposed transaction to buy Aimia's 48.9 per cent stake in Premier Loyalty & Marketing (PLM), a joint venture which owns the Club Premier frequent flyer program, would have given Grupo Aeromexico full control.
"The Company has promptly rejected the offer as it believes that its stake in PLM is worth significantly more than the offer price, which reflected no improvement whatsoever to the terms previously proposed by Aeromexico to Aimia in prior discussions between the parties," Aimia said in a statement Thursday.
Aimia noted that PLM generated adjusted earnings before interest, taxes, depreciation and amortization of US$77.4-million in 2017, and the contract between the two parties runs until 2030.
The offer came one day after a group led by Air Canada offered to buy Aimia's loyalty business Aeroplan in a deal valued at $2.25 billion, including points liabilities they would assume.
Grupo Aeromexico is "playing hardball" said Adam Shine, an analyst with National Bank in a note to clients.
"If it wasn't obvious yesterday, it's increasingly clear today that Aimia is being pushed into selling off its pieces by larger partners who always had a stronger bargaining position in these assorted relationships."
Grupo Aeromexico, which currently owns 51.1 per cent of PLM, had said the offer for Aimia's 48.9 per cent stake would expire at midnight on Aug. 3, but such deadlines are often amended.
Club Premier has more than 3.7 million members and more than 100 partners, according to Aimia's website.
Grupo Aeromexico, which also operates its namesake airline, said it has informed Aimia that its current contract will not be extended beyond its current expiration date in 2030.
"If completed, the Proposed Transaction would result in a positive outcome for Aimia's shareholders as it provides an opportunity to realize an immediate return on the disposal of an asset, the divestiture of which would have otherwise been challenging," the group said in a statement. "The Proposed Transaction would also provide benefits to Aimia's stakeholders as it would provide material financial resources which Aimia can use to strengthen its core business."
Air Canada told its clients that the proposed transaction, which expires Aug. 2, would allow customers to transfer their points to the airline's own loyalty program when it launches in 2020.
Grupo Aeromexico said Thursday that the US$180 million price tag, including dividends and marketing fees paid to Aimia since its investment, represents an annualized rate of return for the Montreal-based company of approximately 18 per cent. The group also said launching an initial public offering of PLM is not an option.
"For this reason it is Aeromexico's view that the best long-term solution for all stakeholders is for Aeromexico to acquire the equity stake currently held by Aimia," it said in a statement.