Sydney Airport Rejects Improved $ 16.8 Billion Takeover Offer Open to Higher Bid

SYDNEY, Aug.16 (Reuters) – Sydney Airport Holdings Pty Ltd (SYD.AX) on Monday rejected an improved bid from a group of infrastructure investors worth AU $ 22.80 billion (AU $ 16.81 billion). dollars), claiming that it was undervaluing the airport operator, but that it was open to a higher supply.

The new offer valued Sydney Airport at AU $ 8.45 per share, which is 2.4% more than the previous offer of AU $ 8.25 per share, and a premium of over 9% over the action closes on Friday.

Shares were down 1.4% at the start of trading on Monday, with the price rising below market expectations, closer to A $ 9 per share.

A successful takeover would be one of the biggest buyouts ever by an Australian company and would mark an exceptional year of activity, which has already seen a mega $ 29 billion buyout of Afterpay (APT.AX) by Square. (SQ.N). Read more

The unanimous rejection by the board comes a month after the airport operator rejected an initial offer from the Sydney Aviation Alliance (SAA), a consortium of Australian investors IFM Investors and QSuper and Global Infrastructure Partners, based in the USA. Read more

Record interest rates have prompted pension funds and their investment managers to seek higher returns.

Australia’s largest pension fund AustralianSuper has joined the consortium, Sydney Airport said, which could make it more difficult for a competing offer to emerge given the requirement for Australian control at 51% from the airport.

UniSuper, Sydney Airport’s largest shareholder with a 15.3% stake, has indicated it is willing to turn this capital into an investment in the privatized company, as required by the terms of the offer . Read more

Sydney Airport said its board of directors was open to engaging with the Sydney Aviation Alliance if the consortium raises its indicative price “to appropriately recognize long-term value for holders of securities of the Sydney Airport “.

Credit Suisse analyst Paul Butler said in a note that the proposal’s small price increase was “surprising”.

“Bidders do not see the value at A $ 9 per share or think there is no rush to strike a deal,” he said.

Now that AustralianSuper is part of the consortium, restrictions on foreign ownership and cross-ownership of airports limit the potential of a competing offer, he added.

Sydney Airport is the only airport operator listed in Australia and a purchase would be a long-term gamble on the travel industry 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. Read more

Still, analysts and investors believe there is room for a price hike given the airport operator’s strong long-term outlook. Read more

Macquarie analysts said given the high property value at Sydney Airport and low interest rates, a valuation of A $ 8.75 could be obtained.

“Sydney Airport (…) is holding an olive branch indicating that it is ready to commit at the right price,” Macquarie said in a note to customers. “There is no statement to indicate that this is the best and the last in SAA, so the butterfly dance continues.”

SAA and AustralianSuper did not immediately respond to requests for comment. Sydney Airport is due to release its first half financial results on Friday.

($ 1 = 1.3565 Australian dollar)

Reporting by Jamie Freed and Paulina Duran; additional reporting by Shashwat Awasthi in Bengaluru; edited by Diane Craft and Richard Pullin

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