Sunday, October 24, 2021

Sydney Airport rejects improved $16.8 billion buyout bid, open to higher offer

Must read

imageStock Markets18 minutes ago (Aug 15, 2021 07:50PM ET)

(C) Reuters. FILE PHOTO: A woman wearing a protective face mask and gloves walks through the international terminal of Kingsford Smith International Airport the morning after Australia implemented an entry ban on non-citizens and non-residents intended to curb the spr

By Jamie Freed and Shashwat Awasthi

SYDNEY (Reuters) – Sydney Airport Holdings Pty Ltd on Monday rejected an improved bid from a group of infrastructure investors worth A$22.80 billion ($16.81 billion) as undervaluing the airport operator, but said it was open to a higher offer.

The new offer valued Sydney Airport at A$8.45 per share, 2.4% higher than the previous offer of A$8.25 a share, and a more than 9% premium to the stock’s Friday close.

A successful takeover would be among the largest buyouts ever of an Australian firm and underline a year of stellar deal activity, that has already seen a mega $29 billion buyout of Afterpay by Square.

The unanimous board rejection comes a month after the airport operator turned down an initial bid from the Sydney Aviation Alliance, a consortium of Australian investors IFM Investors and QSuper and U.S.-based Global Infrastructure Partners.

Record-low interest rates have prompted pension funds and their investment managers to chase higher yields.

Australia’s largest pension fund, AustralianSuper, has joined the consortium, Sydney Airport said, in a move that could make it tougher for a rival offer to emerge given the requirement for 51% Australian control of the airport.

UniSuper, Sydney Airport’s biggest shareholder with a 15.3% stake, has indicated it is open to rolling that equity into an investment in the privatised company, as required as part of the bid conditions.

Sydney Airport said its board was open to engaging with the Sydney Aviation Alliance if the consortium lifts its indicative price “to appropriately recognise long term value for Sydney Airport securityholders.”

Sydney Airport is Australia’s only listed airport operator and a purchase would be a long-term bet on the travel sector which has been battered by the pandemic.

Australia’s international border remains closed and Sydney is in its eighth week of lockdown after an outbreak of the Delta variant of COVID-19.

Nevertheless, analysts and investors believe there is scope for a higher price given the strong long-term outlook for the airport operator.

Jefferies (NYSE:JEF) analyst Anthony Moulder said on July 15 that a price closer to A$9 a share would be a more appropriate premium for the airport operator.

Sydney Airport is due to report its first-half financial results on Friday. Sydney Aviation Alliance and AustralianSuper did not respond immediately to requests for comment.

($1 = 1.3565 Australian dollars)

Sydney Airport rejects improved $16.8 billion buyout bid, open to higher offer

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Latest article