Turk Hava Yollari AO, Turkey’s largest airline, fell to a 10 1/2-week low in Istanbul trading after the state’s asset-sale agency said it’s seeking an adviser on the government’s 49.1 percent stake in the carrier.
Turkish Airlines, as the company is also known, fell as much as 26 kurus, or 4.8 percent, to 5.14 liras, the lowest intraday price since Sept. 23, and was down 3.3 percent as of the market’s midday break at 12:30 p.m. The adviser will determine strategy for the sale of an unspecified amount of the state’s holding in the carrier, the asset-sale agency said in a stock-exchange filing on Dec. 3.
Turkey, whose economy grew at the fastest pace after China’s in the Group of 20 major markets, aims to earn as much as 9.5 billion liras ($6.4 billion) from disposals of government holdings in 2011, Finance Minister Mehmet Simsek said in parliament on Nov. 26. About 50.9 percent of Istanbul-based Turkish Airlines is freely traded, while the corporate charter on the carrier’s web site says foreign entities can’t hold more than 40 percent of the company’s capital.
“A further share sale through a public offering is the most likely outcome,” Gorkem Goker, an analyst at the Istanbul-based Ak Invest, said in a telephone interview. A 25 percent-stake sale is “feasible and likely,” said Goker, who has a “market outperform” recommendation on the stock.
“Prior to the elections that will be held in June 2011, the current government would probably not want to be the target of opposition parties’ speculations about the price of a block sale,” Goker said. “A public offering would overcome such criticisms. At the same time, the ‘golden share’ that gives government a say in board decisions makes the airline less attractive for strategic investors.”
Goker estimated about 68 percent of the traded shares are held by “foreign custodians,” which includes stakes acquired by Turkish investors through brokerages elsewhere.
Turkish Airlines held its initial public offering in 1990 and the government has reduced its holding further with share sales in 2004 and 2006. Goker said he expects a discount of 5 percent “at most” to the price, based on the average closing price of the 10 days before any offer.