Sydney Airport Receives $ 16.7 Billion Takeover Offer; stock increase

SYDNEY, July 5 (Reuters) – Sydney Airport Holdings Pty Ltd (SYD.AX) on Monday announced that a consortium of infrastructure investors had proposed a cash buyout of A $ 22.26 billion (A $ 16.7 billion dollars) of the operator of Australia’s largest airport, pushing its shares up to 38%.

If successful, it would be the biggest deal of its kind in Australia this year, eclipsing the $ 8.1 billion spin-off of Endeavor Group Ltd (EDV.AX) and Star Entertainment Group Ltd (SGR. AX) of $ 7.3 billion for Crown Resorts Ltd (CWN .HACHE).

A consortium of IFM Investors, QSuper pension fund and Global Infrastructure Management has offered A $ 8.25 per Sydney Airport share, a 42% premium over the share’s closing price on Friday , said the airport operator.

Its shares were trading as high as A $ 8.04 on Monday morning, although they then fell back to around A $ 7.68.

Sydney Airport noted that the offer is lower than its pre-pandemic share price and said it is reviewing the proposal, which is dependent on permission to access due diligence and recommend it to shareholders in the absence of a higher offer.

The airport operator’s share price hit an all-time high of A $ 8.86 in January last year, before the pandemic caused a collapse in travel demand.

The company is the only publicly traded Australian airport operator. A successful deal would align its ownership with that of the country’s other major airports, which are owned by consortia of infrastructure investors with long-term investment horizons.

The offer comes at a time when Australia’s international borders are expected to remain closed at least until the end of the year in part due to a slower vaccination schedule against the novel coronavirus than in most developed nations. Read more

Domestic travel has also been severely disrupted by a two-week lockdown in Sydney during the normally busy school holiday period, following an outbreak of the highly contagious Delta variant of COVID-19. Other states have closed borders to residents of Sydney.

In May, Sydney Airport’s international traffic was down more than 93% from the same month of 2019, while domestic traffic was down 39.2%.

The airport has long held a monopoly on traffic to and from Australia’s most populous city, but that is expected to end in 2026 with the opening of Western Sydney Airport.

IFM, QSuper and Global Infrastructure did not immediately respond to Reuters requests for comment.

IFM has stakes in the main Australian airports of Melbourne, Brisbane, Perth and Adelaide. QSuper has a stake in Heathrow Airport in London and Global Infrastructure has an investment in Gatwick and City Airports in London.

Their offer is conditional upon acceptance by UniSuper, the airport’s largest shareholder with a 15% stake, to reinvest its stake for an equivalent stake in the consortium’s vehicle, Sydney Airport said.

UniSuper, which also owns stakes in Adelaide and Brisbane airports, did not respond to a request for comment.

Sydney Airport said it hired Barrenjoey and UBS as financial advisers.

Shares of New Zealand-based Auckland International Airport Ltd (AIA.NZ), the only other listed airport operator in Australasia, were trading up nearly 6% on Monday morning.

($ 1 = AU $ 1.3294)

Reporting by Jamie Freed in Sydney and Scott Murdoch in Hong Kong; Additional reporting by Nikhil Kurian Nainan and Soumyajit Saha in Bengaluru; Editing Stephen Coates and Christopher Cushing

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