Why are AirAsia X and Capital A shares trading lower post-acquisition?

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AirAsia X and Capital A Shares Declined Following Consolidation Deal

AirAsia X Bhd (AAX) and Capital A Bhd shares experienced a decline in morning trading following the completion of AAX's acquisition of AirAsia Bhd (AAB) and AirAsia Aviation Group Ltd from Capital A Bhd. As of 10:10 am, AAX had fallen by three sen to RM1.64 with 31.88 million shares traded, while Capital A's stock decreased by 3.5 sen to 51 sen, with 52.99 million shares changing hands.
Deal Completion and Business Reorientation

The acquisition represents the culmination of efforts to consolidate the group's aviation entities. This consolidation brings all AirAsia-branded airlines under the unified AirAsia Group platform. Concurrently, Capital A is shifting its strategic focus towards the expansion of its non-aviation related ventures.
Expected Operational and Financial Efficiencies

AAX has indicated that this consolidation is anticipated to yield significant operational and financial efficiencies. These are expected to manifest through improved fleet utilisation, more cohesive network planning, and the establishment of a more robust operating framework. The integration is also set to leverage the broader aviation and travel ecosystem cultivated across Capital A's various companies.
Share Issuance and Debt Assumption Details

The transaction was finalised through the issuance of 2.31 billion new ordinary shares in AAX to Capital A and its eligible shareholders. In parallel, AAX has taken on RM3.8 billion in debt that Capital A previously owed to AAB, a move that restructures the financial obligations within the consolidated group.

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Why are AirAsia X and Capital A shares trading lower post-acquisition?

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