SIA's costly lessons in mergers and acquisitions

[Confuseous]

By Karamjit Kaur
Aviation Correspondent


The sale of Singapore Airlines' stake in Virgin Atlantic caps over a decade of mainly failed attempts by the airline to grow its equity portfolio. So one key question shareholders have is "Just how much of the shareholder value has been needlessly destroyed?

Last Tuesday, SIA ended weeks of speculation by announcing that it would sell its 49% stake in Virgin Atlantic to Delta Air Lines. Delta will pay US$360 million (S$439 million), only a fraction of the S$1.6billion that SIA paid for the stake in 2000.

In 2004, SIA sold its 6.3% stake for in Air New Zealand for NZ$61.7 million - for which SIA had paid NZ$426 million in 2000.SIA was also badly burnt when its 25% stake shrank to just 6.3% after Ansett collapsed.

There is talk of a special dividend that may be paid to shareholders out of the $322 million gain from the sale of Virgin Atlantic.

Shareholder Dennis Distant said:[SIZE=3] "First you pay $1.6billion, then you write it down to nothing. Now you sell it and say you have $322 million gain. It is all accounting."[/SIZE]

 

[TracyTan866]

By Karamjit Kaur
Aviation Correspondent


The sale of Singapore Airlines' stake in Virgin Atlantic caps over a decade of mainly failed attempts by the airline to grow its equity portfolio. So one key question shareholders have is "Just how much of the shareholder value has been needlessly destroyed?

Last Tuesday, SIA ended weeks of speculation by announcing that it would sell its 49% stake in Virgin Atlantic to Delta Air Lines. Delta will pay US$360 million (S$439 million), only a fraction of the S$1.6billion that SIA paid for the stake in 2000.

In 2004, SIA sold its 6.3% stake for in Air New Zealand for NZ$61.7 million - for which SIA had paid NZ$426 million in 2000.SIA was also badly burnt when its 25% stake shrank to just 6.3% after Ansett collapsed.

There is talk of a special dividend that may be paid to shareholders out of the $322 million gain from the sale of Virgin Atlantic.

Shareholder Dennis Distant said:[SIZE=3] "First you pay $1.6billion, then you write it down to nothing. Now you sell it and say you have $322 million gain. It is all accounting."[/SIZE]

manipulating with figures..The truth is that SIA made a bad decision and suffered a S$1.3B loss

 

[watchman8]

Many of temasick and GIC investments end up in similar predicament. Fortunately these investments are in private equities, so hardly anyone knows, not even most of their own staff. Doubly fortunately is that MOF is always there to pump in more national assets into these two black holes, to the tune of tens of billions sgd per year.