In a statement released on Thursday, the airport’s board confirmed the proposal by the Sydney Aviation Alliance – made up of QSuper, IFM Australian Infrastructure Fund, the IFM Global Infrastructure Fund and Global Infrastructure Partners – had been knocked back.
The $22.3 billion proposal looked to acquire all of the stapled securities in Sydney Airport Limited and Sydney Airport Trust 1 via a scheme of arrangement and a trust scheme.
“The Sydney Airport boards have carefully considered the indicative proposal, including obtaining advice from their financial and legal advisers,” the statement read.
“The boards have unanimously concluded that the indicative proposal undervalues Sydney Airport and is not in the best interests of securityholders.”
It comes after ACCC said it would “take a very close look at all relevant competition issues” given that IFM, GIP and QSuper are involved with other local airports.
“The boards recognise that the security price is likely to trade below the consortium proposal’s indicative price in the short term, however Sydney Airport will only progress a change in control transaction on terms that deliver and recognise appropriate long term value for Sydney Airport securityholders,” the board’s statement concluded.
“The boards and management will continue to operate the airport with the objective of maximising long term security value.”
On Thursday afternoon, the consortium said it was “surprised and disappointed” by the board’s decision.
“The consortium believes that the proposal of $8.25 cash per stapled security represented an extremely attractive offer for security holders given the considerable short and long term challenges faced by Sydney Airport,” a statement reads.
“The consortium’s proposal represented a very significant premium to recent market prices including a 43 per cent premium to Sydney Airport’s immediate pre proposal closing price on 1 July 2021 of $5.75 and an 81 per cent premium to the issue price of Sydney Airport’s $2 billion equity raising in August 2020 of $4.56.
“The Consortium believes any assessment of Sydney Airport security prices before the pandemic is of limited relevance given the company’s materially changed circumstances and challenging outlook. This includes potentially significant reductions to demand arising from the pandemic, the introduction of a competitor airport in western Sydney in 2026 and changes in business and consumer travel preferences.”
