Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Sydney Airport sale a step closer after improved $17.4 billion offer

Stock MarketsSep 13, 2021 13:15
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: People walk through the domestic terminal at Sydney Airport in Sydney, Australia, December 21, 2020. REUTERS/Loren Elliott/File Photo

(Corrects typo in the dateline)

By Jamie Freed and Paulina Duran

SYDNEY (Reuters) -A sale of Australia's biggest airport moved closer on Monday as an infrastructure investor group won permission to conduct due diligence on Sydney Airport Holdings Pt Ltd, after sweetening its takeover offer to A$23.6 billion ($17.4 billion).

The move sent the airport's shares up 5%, with analysts saying a rival bid appeared unlikely given the scale of the funding needed and foreign ownership rules that mean the airport must remain 51% Australian owned.

"We assign a high probability of a deal succeeding given the board's commitment to unanimously recommend the (consortium's) offer if there is no alternative higher offer," Credit Suisse (SIX:CSGN) analysts said in a note.

Sydney Airport is Australia's only listed airport operator and a purchase would be a long-term bet on the travel sector which has been battered by the pandemic. The country plans to gradually open its borders once 80% of adults are fully vaccinated, a milestone expected by the end of the year.

A successful takeover would be among the largest buyouts ever of an Australian firm and underline a year of stellar deal activity, that has already seen a mega $29 billion buyout of Afterpay by Square (NYSE:SQ).

The improved offer of A$8.75 a share - an increase of 3.6% - follows prior proposals from the consortium pitched at A$8.45 and A$8.25, both of which were rejected by the airport operator's board as inadequate.

Sydney Airport shares were trading at A$8.40 on Monday morning, below the offer price, due to the length of the time the transaction will take to complete as well as the limited prospects for a rival bid.

"An alternative bidder appears highly unlikely," Jefferies analyst Anthony Moulder said in a note to clients.

The bidding consortium, Sydney Aviation Alliance (SAA), is comprised of Australian investors IFM Investors, QSuper and AustralianSuper and U.S.-based Global Infrastructure Partners.

Record-low interest rates have prompted pension funds and their investment managers to chase higher yields. Australia's other major airports are unlisted and owned by pension funds and infrastructure investors.

SAA has been granted non-exclusive due diligence that is expected to take four weeks after signing a non-disclosure agreement, Sydney Airport said.

If SAA makes an acceptable binding proposal, the current intention is for the board to recommend it in the absence of a superior offer, the airport operator added.

UniSuper, Sydney Airport's biggest shareholder with a 15.3% stake, said it was open to rolling that equity into an investment in the privatised company, as required as part of the bid conditions.

"The price represents a very full valuation for the airport, particularly given the uncertain medium-term outlook for international travel," UniSuper Chief Investment Officer John Pearce said in a statement.

The deal will require an independent expert's report, approval from 75% of shareholders and a green light from the competition regulator and the Foreign Investment Review Board, in a process that typically takes months to complete.

Jamie Hanna, deputy head of investments at VanEck, said he believed SAA would consider increasing its bid after examining the airport's books given the improving travel outlook.

An SAA spokesperson said the consortium welcomed the announcement and looked forward to working with Sydney Airport's board to finalise the transaction.

($1 = 1.3587 Australian dollars)

Sydney Airport sale a step closer after improved $17.4 billion offer
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email