Bids for Hungarian airport operator Budapest Airport were way above government expectations, making the sale Hungary's biggest ever privatization transaction, government officials said on Friday.
The government selected five well established airport operators for a second round of bidding in which investors may raise but not lower their original offers.
Bids ranged between HUF390 billion (USD$1.96 billion) and HUF202 billion (USD$1.01 billion), privatization agency APV said, and even the lowest bid exceeded the government's initial estimates.
The top bid equals 32 times Budapest Airport's 2004 pre-tax profit of HUF12.1 billion (USD$60.9 million), also making the deal one of the most expensive airport deals in recent years.
Those who made the cut are Britain's BAA International Holdings, Denmark's Copenhagen Airports, a consortium of Germany's Fraport and Deutsche Bank, Australia's Macquarie Airports Holdings and a consortium of Germany's Hochtief AirPort and Hochtief AirPort Capital.
Those who didn't included a consortium with Spain's Abertis Group, a consortium of Italy's Aeroporto di Venezia Marco Polo, OTP Bank and MOL, a consortium with Ferrovial Infraestructuras and Turkey's Tav Tepe Akfe Ventures.
"It's a hard one to win. Just looking at the high figure, it seems quite expensive to me. It's still too early to say anything specific because we do not know anything about the procedure or about numbers," Jochen Rothenbacher, an analyst at Equinet said.
Prior airport deals also indicate the Budapest transaction is one of the most expensive airport deals in recent years.
Macquarie paid EUR735 million (USD$903.5 million) for a 70 percent stake in Brussels Airport in November 2004 while it also paid DKK1,247 million Danish kroner (USD$205.5 million) in February for an 11.3 percent stake in Copenhagen Airport, which valued that firm at around USD$1.82 billion.
Budapest Airport is one of the quickest growing airports in Europe and the firm expects 7.7 million passengers in 2005, around 20 percent more than a year earlier.
The APV is selling a 75 percent minus one vote stake in Budapest Airport, which does not own the airport infrastructure but will have a 75 year right to manage and operate the airport.
"This is the single biggest Hungarian privatization ever and following the final bid we expect to see this record broken as well," Finance Minister Janos Veres told a news conference.
However, a concurrent but separate tender to sell loss-making state airline, Malev, was canceled on Friday, making it the fifth time since the end of the communism era in 1990 that the sale has failed.
The government said bids for Malev were too low and, after the closure of the Budapest Airport deal, investors would be able to better value the airline and the government would launch a new attempt to attract a strategic investor.
One bidder offered just HUF150 million (USD$755,000) to buy Malev and to inject capital of HUF9 billion (USD$45.3 million), while the other offered HUF1 billion (USD$5 million) and a capital rise of HUF4 billion (USD$20.1 million).
Both bidders undertook to pre-pay the full amount of outstanding commercial bank loans worth about HUF13 billion (USD$65.4 million) within one year and to repay Hungarian Development Bank loans worth about HUF19 billion (USD$95.6 million) over 25 years and 20 years.
"During this process, we had to sell Malev's past, after Budapest Airport closes we'll be able to sell it based on a new vision for its future," APV Chief Executive Marton Vagi said.
APV had been holding negotiations with Airbridge, a consortium backed by Russian airline KrasAir, whose bid it had preferred over an offer by a consortium including former Malev managers.
