The Celebioglu Family has signed a non-binding letter of intent with Actera Group regarding their shares in Celebi Aviation Holding and Celebi Ground Handling.
Accordingly, 99.99% of Celebi Aviation Holding and 22.63% of Celebi Ground Handling are to be transferred to a newly-established company, in which Actera and the Celebioglu Family will have a 50%-50% partnership. No transaction value has yet been announced.
Details of the structure
The company's main shareholders currently are Celebi Aviation Holding (54.7%) and the Celebioglu family (22.6%), while the remaining 22.7% stake is publicly held. Celebi Aviation Holding, on the other hand, is fully owned by the Celebioglu family. Consequently, the Celebioglu family's effective ownership in Celebi Ground Handling currently stands at 77%.
As far as we understand from the company's public disclosure, the implication of the deal for listed Celebi Ground Handling's shareholder structure will be that Actera will own half of the 77% effective ownership of the Celebioglu Family in Celebi Ground Handling. Should the transaction be finalized as initially announced, there would be no cash injection into Celebi Ground Handling, as the owners of the company are selling their stakes.
We still welcome the announcement as a positive move for Celebi Ground Handling even though there would be no cash injection into the company, as such a partnership with Actera would probably result in organic and (mostly) inorganic growth opportunities.
According to the Actera website, Actera Group is the largest private equity firm dedicated to investments in Turkey with a total equity capitalization in excess of USD1.6bn. Mey Icki (alcoholic beverages) and Mars Entertainment Group are among the group's investments.
Impact on share performance
We consider the JV talks a supportive development for the share price, although the deal does not seem to be subject to a tender offer obligation, as (i) the deal value would likely show that Celebi shares are trading at a large discount and (ii) the stock experienced a good run in 2011, after the announcement of JV talks with Abraaj, which later failed.
Celebi currently trades at TRY16.45/share implying a market capitalization of EUR181mn which is 43% below our 12M target Mcap of EUR258mn, and which is based on a firmly conservative approach. We expect the transaction value to exceed the trading value and demonstrate the attractive valuation of Celebi.
Additionally, were history to be taken as a proxy for today, we remind readers that the stock experienced ~20% run after the announcement of JV talks with Abraaj back in March 2011.
Awaiting positive outcome
All in all, our first impression is totally positive, and we welcome the re-initiation of JV talks. Yet we also find it useful to remind readers that, since August 2008, when Celebi Holding decided to mandate an investment bank to seek strategic partnership opportunities, the market has been expecting the finalization of a deal. Yet thus far no deal has materialized, and an further failure in JV talks would likely negatively impact market perception of the stock, and could have negative consequences for the share performance too.