Sydney Airport rejects ‘opportunistic’ A$22.8bn revised takeover bid

The airport’s board says the revised bid continues to undervalue the asset despite a recent surge in covid-19 cases and extended lockdowns in major Australian cities.

Sydney Airport has rejected a A$22.8 billion ($16.8 billion; €14.2 billion) revised takeover bid by a consortium led by IFM Investors for failing to recognise the long-term value of the airport.

The revised indicative, conditional and non-binding proposal of A$8.45 cash per stapled security was submitted to the company on Friday. It follows a previous failed bid of A$8.25 per stapled security made by the consortium in July.

In a statement on Monday, the company said its board had “unanimously concluded” that the latest offer from the consortium continued to undervalue Sydney Airport and was not in the best interests of shareholders.

The announcement comes as Sydney enters its third month of an extended lockdown, with other major cities and regional areas in Australia also facing lockdowns due to a surge in covid-19 cases. The company maintained the current situation did not change its boards’ view of the airport’s long-term value.

“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. At the current indicative price of A$8.45 per stapled security, the boards continue to view the revised indicative proposal as opportunistic in light of the covid-19 pandemic,” the company said.

The statement also revealed AustralianSuper had joined the consortium – known as the Sydney Aviation Alliance – for the revised proposal. In addition to IFM and AustralianSuper, the consortium consists of QSuper and Global Infrastructure Partners.

“The boards are open to engaging with the Sydney Aviation Alliance should the consortium be prepared to lift its indicative price to appropriately recognise long-term value for Sydney Airport securityholders,” the company added.

In a statement, the consortium said it was “disappointed” Sydney Airport had rejected its latest offer: “The consortium firmly believes that the revised proposal, if implemented, would deliver significant value and economic certainty to Sydney Airport securityholders and is in the long-term interest of Sydney and the travelling public.”

“Given Sydney Airport’s lack of engagement and immediate rejection of the revised proposal (and the view that it is opportunistic), it appears unlikely that the parties can agree a path forward and, as such, there is no assurance the revised proposal will proceed.”