Malaysia’s National Aerospace and Defence Industries (NADI), the parent of military maintenance company Airod and aircraft component manufacturer SME Aerospace, is entertaining takeover offers after failing twice to secure approval for an initial public offering (IPO), writes Brendan Sobie.
Industry sources say NADI majority owner Tan Sri Ahmad Johan is in talks with several companies and individuals interested in acquiring his 90% stake in NADI or its subsidiaries. Sources say the government, which owns the remaining 10% stake in NADI, is encouraging Johan to sell all his shares. NADI applied for an IPO with the Kuala Lumpur stock exchange in 2004 and again last year, but both times was rejected.
Sources say the government was reluctant to let Airod become a public company and prefers it is restructured and made more efficient with investment from a new private owner. Airod, which relies on the Malaysian military for about 90% of its revenues, has struggled in recent years after losing its monopoly status as the nation’s only military aircraft maintenance and upgrade provider. New companies including DRB-Hicom subsidiary Defence Technologies (DefTech) are now competing with Airod for maintenance repair and overhaul (MRO) contracts covering newly acquired Malaysian military aircraft. Sources say the potential new owners of Airod have been given assurances by the government it will continue to be the primary MRO provider for the Malaysian military.
Sources say all of NADI could be sold to one owner, or the subsidiaries may be split up and sold to different bidders. NADI owns all of SME Aviation, SME Aerospace, SME Ordnance and Subang Aviation Services, plus a 70% stake in RSK MiG-29 MRO provider Aerospace Technology System.
Source: Flight International
