Air Canada and its partners might face an uphill battle convincing Aimia Inc. to sell Aeroplan because the company’s largest shareholder believes the loyalty program is worth four times what they’re offering.
The country’s largest carrier said Wednesday it had partnered with the Canadian arm of Visa Inc. and two Canadian banks to put together a proposal to acquire Aeroplan from Aimia for about $250 million in cash, or roughly $1.64 per share.
That’s a far cry from what Mittleman Brothers, Aimia’s largest shareholder, believes its worth. In a letter to investors obtained by Bloomberg, Mittleman said it believed Aeroplan was worth about $1 billion, or $6.57 a share. The firm owns about an 18 per cent stake in Montreal-based Aimia, according to data compiled by Bloomberg.
The Melville, New York-based investment firm also said in the July 24 letter it believes Aeroplan has “strategic value” above that $1 billion mark for its 5 million members and its “key commercial contracts” with Toronto Dominion Bank, Canadian Imperial Bank of Commerce, American Express and Air Canada which it said “have hundreds of millions of annual profits at stake in preserving it.”
TD and CIBC are Air Canada’s other partners in the bid for Aeroplan.
‘Recent Progress’
Mittleman Brothers said it believes Aimia is worth about $10 a share on a sum of its parts valuation. That’s well above the $3.44 a share it closed at on Thursday.
“We are pleased with the recent progress made at the board and management level and are optimistic that further evidence of success will be forthcoming,” Mittleman Brothers said in the letter. “Aimia remains one of the most exciting investment opportunities in the public markets today.”
On Thursday, Aimia said it also rejected an $180 million bid from Grupo Aeromexico for a minority stake in the PLM Premier rewards plan operator, saying the offer is too low.
In its letter, Mittleman Brothers said it estimated the value of that 48.9 per cent stake at about $489 million, or $3.21 a share.
The rest of its investments, including Aimia’s stake in Cardlytics, Think BIG Digital, Air Miles Middle East, and Fractal Analytics made up the remainder of the $1.54 billion net asset value Mittleman Brothers ascribes to its investment.
Aimia has been facing investors’ calls for change, including new management and asset sales. Last year the company’s stock plunged 58 per cent after Air Canada announced in May that it would break off its relationship with Aimia to run its own rewards program to 2020.
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