Merged Avianca/Taca Airline May Pursue IPO -Source
09 October 2009 - 7:02AM
Dow Jones News
Avianca SA, Colombia's largest airline, may return to the U.S.
stock market with a public offering following its planned merger
with El Salvador's Grupo Taca, according to a person familiar with
the situation.
The companies announced plans Wednesday to combine, creating one
of Latin America's largest airline groups with annual revenue of
almost $3 billion and operations throughout the region.
Avianca delisted from the New York Stock Exchange when it filed
for Chapter 11 protection in 2003. It emerged the following year
after Brazil's Synergy Group fended off competing takeover offers
from groups led by Avianca's pilots and Continental Airlines Inc.
(CAL). It has been profitable ever since.
German Efromovich, the Bolivian-born businessman who controls
Synergy, said Wednesday that an IPO was not imminent.
"All businessmen would see the stock market as a possible
financing source, so we don't rule [it] out, but there are no
immediate plans," he told Dow Jones Newswires.
However, four of Latin America's largest carriers already have
U.S. listings: Lan Airlines SA (LAN-SGO), Copa Holdings SA (CPA),
Tam SA (TAMM4-BS) and GOL Linhas Aereas Inteligentes SA (GOLL4-BS).
Buoyant traffic growth in the region has made their market
performance more resilient than American counterparts.
A source familiar with the Avianca-Taca plan said it was "fair
to assume" that an IPO would be considered when the proposed merger
had been completed and demonstrated synergies.
Avianca had taken steps to prepare for an IPO two years ago, but
shelved the plan when markets soured, said another person familiar
with its strategy.
The two airlines' owners reached agreement after a year of talks
aimed at creating a regional carrier with more critical mass to
compete with U.S. and European rivals on longhaul routes.
Taca built up a group of standalone carriers throughout central
America, plus one in Peru, while Avianca also owns Brazil's
OceanAir and Ecuador's VIP, which will be included in the joint
holding company alongside Aerogal, another Ecuadorian carrier being
acquired by Synergy.
The 25% stake held by Taca in Volaris, a Mexican airline, is not
part of the deal, said a person familiar with the all-stock
combination that would see Synergy hold two-thirds of the enlarged
company.
The airlines will maintain their brands and operating
certificates to comply with international rules governing
ownership.
However, the partners see wide-ranging synergies, moving Avianca
to an all-Airbus fleet to match Taca and Ocean Air.
Efromovich said he planned orders beyond those already placed by
the partners. OceanAir's expansion includes 10 Airbus A350s to
launch longhaul service.
Synergy, which has extensive energy assets in Latin America, did
not hire investment bankers for the proposed deal, using Simpson
Thacher & Bartlett and Gómez-Pinzón Zuleta as counsel. Taca was
advised by Bank of America Merrill Lynch and Caoba Capital, with
Greenberg Traurig as counsel.
-By Inti Landauro and Doug Cameron; Dow Jones Newswires;
57-1-610 70 44 Ext. 1131, colombia@dowjones.com