The Australian financial company IFM Investors wants to increase its stake in Vienna Airport to 49.9 percent. The Executive Board and the Supervisory Board are outraged and are fighting back. Outcome uncertain.
It was June 15, 1992, when Vienna Airport shares were traded on the Vienna Stock Exchange for the first time. At that time, the Republic of Austria withdrew as the owner of 50 percent of the shares, the provinces of Vienna and Lower Austria reduced theirs from 25 to 20 percent each. An airport employee foundation received 10 percent of the shares.
From then on, 50 percent minus one share of the Austrian airport operator were traded on the stock exchange. This order, and also the political supervision by the social-democratic Vienna and the federal state of Lower Austria, which is led by the conservative ÖVP, has not been shaken for decades. Until the end of 2014.
An offer with a clear premium
Eight years ago, the Australian financial company IFM Investors bought 29.9 percent of the Flughafen Wien shares via its subsidiary IFM Airports Group Europe. In April 2016, it increased its stake to 38.16 percent. At the beginning of June 2022, it increased further – to just under 40 percent. Normally, this forces the investor to make an offer to the remaining shareholders for their shares. The Takeover Board did not see it that way and made the mandatory offer unnecessary.
As a result, IFM Investors submitted a voluntary takeover bid in June. The Australians offered 33 euros per share. That is around 25 percent more than the share price then and now.
Ministry of Economy examines
The Executive Board and Supervisory Board of Vienna Airport advised against accepting the purchase offer. Their justification: because of the positive development of the airport, which is also completely debt-free, the asking price is too low. And there is a risk that the tradability of the share could be further restricted and thus lead to a delisting from the stock exchange.
It is now up to the Ministry of Economics and Labor to examine IFM’s offer in accordance with the Investment Control Act. In accordance with EU requirements, foreign direct investments are checked to see whether they could endanger critical infrastructure facilities.
The peace treaty is broken
As far as the published facts. In addition, neither the ministry nor the airport wants to comment on the case. It is therefore unclear how the whole thing will end and whether IFM Investors will be allowed to increase its stake in Vienna Airport to up to 49.9 percent.
According to research, IFM wanted to acquire 40 percent of the airport in 2014. It was agreed at the time that it was just under 30 percent. The financial company then increased its shares in April 2016 without consultation or consultation, causing great anger among the other shareholders. The promise never to go beyond the 40 percent of the syndicate from Vienna and Lower Austria was a kind of peace agreement.
Advantages of being listed on the stock exchange
It only lasted until 2020, when IFM Investors presented a catalog of demands that contradicted the character of a financial investor. With wishes up to a board position. The peace finally shattered in early June when the Australians, again unannounced, presented their offer.
If the targeted increase to 49.9 percent succeeds, this will at least result in uncertainties. Will public and location interests then continue to be easily compatible with the business and financial interests of the investor? What happens when the largest single shareholder, IFM, is continually overruled by the syndicate with the help of the employee foundation on important issues? Could this be interpreted as a reversal of the majority situation – and Vienna, Lower Austria and the employee foundation suddenly being forced to make a takeover bid? And last but not least: a stock exchange listing makes the work of the board members more comprehensible and transparent to the outside world.
Opaque structure
Transparency is not always there at IFM. According to the takeover bid, the takeover vehicle leads via Liechtenstein to the Cayman Islands. It is the typical construct of a tax-optimized financial investor with nesting across various tax havens.
IFM was founded in 1990 with a focus on infrastructure, private equity and Australian equities. The largest shareholders are 20 large pension funds from around the world. Assets under management total $200 billion.