AENA tensions rock Aldeasa bid

John Gallagher

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Friction between the Spanish airport authority and Aldeasa over their current concession agreement has surprised the Gestion de Explotaciones Aeroportuarias consortium and other interested parties

The bidding race for Spanish travel retailer Aldeasa took a dramatic turn last night as details of friction between the company and Spanish airport authority AENA emerged. Documents filed with Spanish stock market regulator CNMV reveal that the authority has expressed discontent with the level of fees paid by the operator throughout its Spanish network, and RavenFox.com understands that Aldeasa's payments could be increased by around five per cent.

Correspondence between Aldeasa's president José Fernandez Olano and AENA CEO Manuel Azuaga, lodged with CNMV in accordance with the Spanish stock market's regulatory code, reveal that tension between the two companies came to a head after a series of meetings in December. And last week AENA advised the retailer that it was examining several changes to its contract.

AENA requested that the canon on duty-paid sales should rise to 22% of sales with an annual minimum of Eu66.5m ($86.8m), with the fee on duty-free sales should rising to 30% with a minimum guarantee of Eu21m ($27.4m). It is difficult to assess the impact on Aldeasa's profits of such a move but leading financial daily Cinco Dias estimated a negative impact of between Eu15m ($19.6m) and Eu17m ($22.2m). AENA also requested that the level of staffing be kept at current levels and require that Aldeasa install by new point of sale terminals in all outlets by March 1. Finally, AENA informed Aldeasa that it would be re-examining the commercial mix in all duty-free and duty-paid establishments.

In his reply, Fernandez Olano argued that there was no legal justification to make changes to the concession contract, but indicated his eagerness to find a solution to the problems that would not damage the interests of Aldeasa's shareholders. Olano requested that further negotiations take place once the outcome of the bid is known.

Over 80% of Aldeasa's turnover is generated at AENA-controlled airports. Aldeasa clinched a contract extension at Madrid Barajas at the end of 2003, and the tender for Tenerife Sur was called at the end of last month, but the concession contract for the majority of the airports in the network runs until December 31 2006.

The Gestion de Explotaciones Aeroportuarias (GEA) consortium last night limited itself to an expression of ?absolute surprise? at AENA's wish to renegotiate. The group will be reworking their numbers and further comments are expected from them next week. The reaction of Advent International and other potential bidders will be interesting ? GEA had indicated that its Eu29 ($37.9) per share bid represented full value for the shareholders, although many analysts considered that an offer of Eu31 ($40.5) per share would be a more accurate reflection. Market rumours of a revised offer from GEA and counter bids from Advent and other venture capital companies led Aldeasa's share price to close on Friday at a five-year high, at Eu33.50 ($43.7). But news of AENA's discontent suggests that venture capitalists will be thinking carefully before placing a counter bid.