Sydney Airport has knocked back a second takeover offer from a super fund-led investment consortium that it says “continues to undervalue” the group’s assets.
In a statement to the market on Monday, Sydney Airport said it had received a second offer from the Sydney Aviation Alliance – made up of investors including the industry fund-owned IFM Investors and QSuper – following its rejection of a previous $22.3 billion bid from the group.
“Sydney Airport today announces it has received a revised indicative, conditional and non-binding proposal from the Sydney Aviation Alliance that provides for an acquisition, by way of scheme of arrangement and trust scheme, of 100 per cent of the stapled securities of Sydney Airport at an indicative price of $8.45 cash per stapled security,” the company said.
“The terms and conditions of the revised indicative proposal are otherwise consistent with the original indicative proposal received from the consortium on 5 July, which had an indicative price of $8.25 per stapled security, which was unanimously rejected by the boards of Sydney Airport.
“The boards have carefully considered the revised indicative proposal, including obtaining advice from their financial and legal advisers. The boards have unanimously concluded that the revised indicative proposal continues to undervalue Sydney Airport and is not in the best interests of securityholders.”
Sydney Airport confirmed that Australia’s largest super fund, AustralianSuper, had also joined the investment consortium bidding for the airport.
Despite the resurgence of COVID-19 in the Australian community leading to rolling state lockdowns, the company said it did not believe the current environment “[changed] the boards’ view of long-term value” and that the revised offer was “opportunistic in light of the pandemic”.
“The boards note the rapid increase and acceleration in Australian vaccination rates in recent weeks and governments’ plans to progressively ease restrictions as the population reaches vaccination targets which will then see the reopening of travel,” the group said.
“Sydney Airport remains strongly positioned, has strengthened its balance sheet and tightly managed costs to maintain flexibility to respond to a range of recovery scenarios and to pursue sensible growth opportunities as the recovery unfolds.
“The boards are open to engaging with Sydney Aviation Alliance should the consortium be prepared to lift its indicative price to appropriately recognise long term value for Sydney Airport securityholders.”
Commenting on the news, the Sydney Aviation Alliance said it was "extremely disappointed" that Sydney Airport's board had "failed to engage with the consortium" on the proposal, which was delivered on Friday afternoon.
"The revised proposal values Sydney Airport’s equity at $22.8 billion, which is $7.3 billion above Sydney Airport’s equity value prior to the original proposal. It represents a significant premium to market prices prior to the original proposal, including a premium of 47% to the pre-offer closing price of A$5.75," the group said.
"The consortium believes any assessment of Sydney Airport security prices before the pandemic is of limited relevance given Sydney Airport’s materially changed circumstances and the weakened short and longer term aviation outlook. This includes potentially significant reductions to demand arising from the pandemic, the introduction of a competitor airport in western Sydney in 2026 and expected long term changes in business and consumer travel preferences."
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