Sydney Airport Board rejects $16.6 billion acquisition proposal Reuters

Author: Jamie Fried

SYDNEY (Reuters)-Sydney Airport Holdings Limited said on Thursday that it would reject a 22.26 billion Australian dollars (16.6 billion U.S. dollars) takeover offer from a group of infrastructure investors. If successful, this would be one of Australia’s largest acquisitions in history One.

The operator of Australia’s largest airport said that the directors agreed that the proposal underestimated the value of the airport and was not in the best interests of shareholders.

Sydney Air Alliance-a consortium of IFM Investors, QSuper and Global Infrastructure Partners-last week’s bid was 8.25 Australian dollars per share, a 42% premium to the final transaction price of the epidemic-torn company before the bid.

Before the proposal was rejected, its stock price closed at 7.80 Australian dollars on Wednesday, because there is uncertainty about whether the board will accept the proposal, which depends on its proposal.

The company said on Thursday that it acknowledges that its stock price may be below the consortium’s indicative price in the short term, but said it will only advance changes in control transactions to “deliver and confirm appropriate long-term value”.

Sydney Air Alliance did not immediately respond to a request for comment.

Jefferies (NYSE:) analyst Anthony Moulder said last week that the proposal was seen as a good start, but did not provide a sufficient acquisition premium to current fair value.

Sydney Airport is Australia’s only listed airport operator, and the acquisition will be a long-term bet on the tourism industry. After the increase in local COVID-19 cases, the city is currently locked down for at least another two weeks.

A successful transaction will align its ownership with other major airports in the country owned by a consortium of infrastructure investors (mainly pension funds).

Record low interest rates have prompted pension funds and their investment managers to chase higher yields. The acquisition has a corporate value of A$30 billion, including debt, and will enable them to reap financial benefits when the border reopens and travel demand rebounds.

Refinitiv’s data shows that if successful, the acquisition will be one of the largest corporate values ​​in the country’s history in U.S. dollars, and Unibail-Rodamco (AS:) purchased a shopping center operator for 22 billion U.S. dollars in 2017 Westfield Group is comparable.

Bloomberg News reported last week, citing unnamed sources, that a consortium led by Macquarie Group (OTC:) was considering offers from competitors. The report added that the negotiations are still in the early stages and Macquarie may also consider joining the Sydney Air Alliance.

($1 = 1.3407 Australian dollars)