Hungary and Vinci Buy Budapest Airport in $4.7 Billion Deal
(Bloomberg) -- Hungary and French construction giant Vinci SA bought Budapest Airport Zrt. in a €4.3 billion ($4.7 billion) deal, handing a major asset to Prime Minister Viktor Orban who had long coveted the hub.
The buyers paid €3.1 billion for the airport and assumed a net debt of €1.2 billion, according to a government statement. Bloomberg was first to report the valuation earlier on Thursday. The sellers were AviAlliance GmbH, the German operator of the Hungarian hub, as well as Singapore sovereign wealth fund GIC Pte and Canada-based Caisse de Depot et Placement du Quebec.
Orban has championed the acquisition as part of a broader push to boost local ownership in strategic assets. Hungary purchased an 80% stake in the hub while Vinci took the rest. The deal, which had been cleared by the European Union, was closed upon signing.
“The airport ownership is a question of sovereignty,” Hungarian Economy Minister Marton Nagy said in the statement. “It’s not just about passenger transport and tourism but it’s also strategically important as a cargo hub.”
Ranked the 39th busiest in Europe, the airport has been considered the crown jewel for Hungary’s tourism and logistics industries. Budapest has had an average of 307 daily flights year-to-date, the same as Prague, according to Eurocontrol data.
The deal is likely a first step to develop the airport for Hungary, which has been in talks with Qatar Investment Authority to join the consortium at a later date. Hungary wants to build a third terminal and boost capacity for both passengers and cargo, Nagy told Bloomberg in an interview in December.
The government has been positioning Budapest as a gateway for Chinese tourists and investments in the EU after winning a series of big-ticket battery plant and car factory investments, including from BYD Co., which is setting up its first European EV factory in Hungary.
Budapest Airport estimates it will attract close to 17 million passengers this year, up from 14.7 million last year. The hub posted a profit of €74 million in 2023 after revenues climbed an annual 20% to €338 million. It was operated under a concession that expires in 2080.
For Vinci, the Budapest stake is part of an aggressive expansion that’s bolstering its claim to be the world’s leading private airport operator. The French construction giant has 70 airports globally, according to its website, including facilities in France and Portugal and significant operations in Latin America.
In April, Vinci agreed to buy a majority stake in Edinburgh Airport for £1.3 billion ($1.6 billion), expanding its UK footprint after purchasing majority stakes in London Gatwick and Belfast International since 2018.
Orban has long coveted Budapest Airport but was forced to abandon an earlier takeover attempt in 2021 amid a cash squeeze. That bid involved Hungarian energy company Mol Nyrt. and people close to Orban.
The fiscal situation is still tight, with the budget racking up a $7.2 billion shortfall in the first four months of the year — more than the annual target. But in a sign of the deal’s importance, Orban authorized a number of state divestitures to build a war chest for the airport purchase.
Hungary sold a 15% stake in the local unit of Erste Group Bank AG and a 35% stake in the Hungarian unit of Vienna Insurance Group in the run-up to the renewed acquisition. State-owned lenders also issued debt to cover the rest of the ticket price.
AviAlliance initially had no plans to sell the airport. It entered into talks after a years-long government campaign that sought to push out the current owners for under-investing in the hub, a claim the management has denied.
