Capital A Berhad, the parent company of AirAsia, is planning a merger with Nasdaq-listed Aetherium Acquisition Corp., according to a letter of intent initiated by the companies. The proposed merger, valued at $1 billion, will form a new entity named Capital A International, transitioning it into a standalone U.S.-listed company.
The new entity, Capital A International, will leverage the AirAsia brand and its expertise in aviation, travel, hospitality, and digital technology. Revenue sources for the new entity are expected to include brand royalty, aircraft leasing, tactical acquisitions, incubation, and entrepreneurial partnerships.
Tony Fernandes, CEO of Capital A Berhad, expects this merger to enhance the global profile of the AirAsia brand through exposure in the U.S. market and a Nasdaq listing. The merger is also anticipated to support AirAsia's expansion plans in the Philippines.
The proposed merger includes units like Teleport and AirAsia Move, which focus on startup acquisition and incubation. This move is part of a broader strategy aimed at expanding its shareholder base while leveraging high-quality, profitable assets managed by an exceptional team.
In 2022, AirAsia planned to double its fleet size currently services 14 domestic and 13 international destinations. Following the announcement of the proposed merger, the parties are working towards finalizing the business combination agreement after securing regulatory requirements.
Jonathan Chan, CEO of Aetherium Acquisition Corp., views the Nasdaq listing as a crucial tool for delivering their strategy amidst the aviation sector's recovery and increasing air travel demand.
The proposed merger is still subject to regulatory approvals from Bursa Securities, the Central Bank of Malaysia, and other regulatory bodies.
InvestingPro Insights
Capital A Berhad, the parent company of AirAsia, has shown promising metrics as per InvestingPro data. With an impressive operating income margin of 86.88% as of Q3 2023, the company has demonstrated strong profitability. Additionally, the P/E Ratio (Adjusted) for the same period stands at 4.55, indicating that the stock is trading at a low earnings multiple. This could be a potential indicator of undervaluation, making it an interesting prospect for investors.
InvestingPro Tips highlights that Capital A Berhad has consistently increased its earnings per share and analysts anticipate sales growth in the current year. This aligns well with the company's ambitious expansion plans, which include doubling its fleet size and enhancing its global profile through a U.S. market presence and Nasdaq listing.
While the company has raised its dividend for 4 consecutive years, it's worth noting that it does not currently pay a dividend to shareholders. Investors should also take into account that the company's short-term obligations exceed its liquid assets, indicating potential liquidity concerns.
These insights, along with many more, are part of the comprehensive analysis offered by InvestingPro. For a more detailed view of Capital A Berhad's performance and potential, consider exploring the additional tips available on InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.