AIM Preferreds Jump Again with New Bid for Other Assets

Aimia has received another bid for some of its assets:

Aimia Inc. has received its second hostile bid in as many days − this time for its large stake in Mexico’s leading frequent-flyer program.

The day after Air Canada launched a hostile offer for Aeroplan, the loyalty-rewards program owned by Aimia, Grupo Aeromexico announced its own bid to acquire Aimia’s 49-per-cent stake in PLM Premier for US$180-million, or $235-million.

PLM runs Club Premier, Mexico’s frequent-flyer program, which has partnered with national airline Aeromexico. The airline already controls the majority stake in PLM.

Aimia turned down the offer in a matter of hours, arguing that Aeromexico undervalued the asset.

Aeromexico’s press release highlights the unusual circumstance that Aimia will actually have made some money on its investment:

Grupo Aeromexico (“Aeromexico”) informs that, as a current shareholder of 51.145% of PLM Premier, S.A.P.I. de C.V. (“PLM”), it has made a non-binding proposal for the acquisition of the shares currently held by Aimia Inc (“Aimia”), representing 48.855% on a fully diluted basis, of the outstanding shares of capital stock (the “Stock”) of PLM (the “Proposed Transaction”) for an amount of $180 million US dollars. This amount, including dividends and marketing fees paid to Aimia since its investment, represents an annualized rate of return for Aimia of approximately 18%.

And, as noted in the news story, Aimia scorned the idea:

Aimia Inc. (TSX: AIM), a data-driven marketing and loyalty analytics company, today confirms that it has received a non-binding offer (the “Offer”) from Grupo Aeromexico S.A.B. de C.V. (“Aeromexico”) to acquire for US$180 million Aimia’s 48.855% stake in PLM Premier, S.A.P.I. de C.V. (“PLM”), the owner and operator of Aeromexico’s Club Premier frequent flyer program. Aimia also announces that it has formally notified Aeromexico that the Offer has been rejected.

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. By way of reminder, PLM generated Adjusted EBITDA of US$77.4 million in 20171 and the current contract term between PLM and Aeromexico runs to 2030.

All this follows yesterday’s bid for the Aeroplan Canadian operation. I’m not sure why the newspapers persist in calling these ‘hostile bids’. It’s unusual that they’re public, of course, but management and the board have sole discretion regarding what to do, as far as I understand it. Shareholders will not get a vote.

AIM preferreds jumped on the news:

AIM Preferreds Performance
Ticker Description Bid
AIM.PR.A FixedReset
17.05 19.02 +12%
AIM.PR.B FloatingReset
17.00 19.06 +12%
AIM.PR.C FixedReset
17.00 19.30 +14%

All three issues are tracked by HIMIPref™ but are relegated to the Scraps index on credit concerns.

Note that the bids are not for the company, just for most of its assets. If successful, the bid will change the balance sheet significantly – and just how good the preferreds will look at that point will be the topic of much speculation and puzzling over the balance sheet.

One Response to “AIM Preferreds Jump Again with New Bid for Other Assets”

  1. dodoi says:

    This was my concern as well and also the possibility of a special dividend like it happened with Sears. I had a few preferred shares and got out a little too early but overall I am happy though it would have been wonderful a dividend like a credit card interest.

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