Australia’s Sydney Airport has received a $17bn takeover offer from a consortium of investment companies, in a bet on the country’s recovery from international isolation during the coronavirus pandemic.
The consortium offered A$8.25 (US$6.20) a share for the operator of Australia’s busiest gateway, Kingsford Smith International Airport, the company said in a stock exchange filing on Monday.
Sydney Airport shares rose as much as 40 per cent to A$8 following the bid. The stock was trading at almost A$9 per share before the coronavirus pandemic shut down Australia’s borders early last year.
Members of the consortium included Australian investment manager IFM Investors, pension fund QSuper and Global Infrastructure Management (Australia), an affiliate of New York-based asset manager Global Infrastructure Partners.
IFM Investors manages more than A$155bn in assets and is owned by pension groups including Australian Super, Cbus, Hesta and Hostplus.
IFM owns 25 per cent of Melbourne Airport, 20 per cent of Brisbane Airport and 13 per cent of Adelaide Airport as well as a stake in Perth Airport, which are all unlisted.
Sydney Airport said it would consider “whether the proposal is reflective of the underlying value of the airport given its long-term remaining concession and the expected short-term impact of the pandemic”.
The proposal “has been made during a global pandemic which has deeply affected the aviation industry and the Sydney Airport security price”, the company said.
The airport operator noted that the “indicative price is below where Sydney Airport’s security price traded before the pandemic”. The proposal represents a price 42 per cent above the company’s share price at the close of trading on Friday.
The bid is dependent on UniSuper, which holds about 15 per cent of Sydney Airport, agreeing to reinvest its equity interest for an equivalent equity interest in the consortium’s holding vehicle, rather than cash.
Australia’s strategy of trying to eliminate Covid-19 by closing its borders has devastated the tourism and leisure industries, especially aviation.
In May, Sydney Airport’s international traffic was down more than 93 per cent compared with the same month of 2019. Domestic traffic, which has resumed with interruptions from persistent local lockdowns, fell 39 per cent in 2019
Sydney Airport holds a monopoly on traffic to and from Australia’s most populous city, but that is due to end in 2026 with the opening of Western Sydney Airport. The company is Australia’s only listed airport operator.
Sydney Airport named Barrenjoey Capital Partners and UBS Group as its advisers on the offer.
