By Jamie Freed
SYDNEY (Reuters) -Sydney Airport Holdings Pty Ltd said on Thursday it would reject a A$22.26 billion ($16.60 billion) takeover proposal from a group of infrastructure investors, that, if successful, would have been one of Australia’s biggest-ever buyouts.
The operator of Australia’s largest airport said directors had unanimously concluded the proposal undervalued the airport and was not in the best interest of shareholders.
The Sydney Aviation Alliance – a consortium comprising IFM Investors, QSuper and Global Infrastructure Partners – last week offered A$8.25 per share, a 42% premium to the pandemic-ravaged company’s last trading price before the offer was made.
Its shares closed at A$7.80 on Wednesday before the proposal was rejected, amid uncertainty over whether the board would accept the proposal, which was contingent on its recommendation.
The company said on Thursday it recognised its share price was likely to trade below the consortium’s indicative price in the short-term but said it would only progress a change in control transaction that would “deliver and recognise appropriate long-term value”.
The Sydney Aviation Alliance did not respond immediately to a request for comment.
Jefferies analyst Anthony Moulder last week said the proposal was seen as a good start, but not one that gave a sufficient takeover premium to the current fair value.
Sydney Airport is Australia’s only listed airport operator and a purchase would be a long-term bet on the travel sector. The city is currently in lockdown for at least two more weeks after a rise in local COVID-19 cases.
A successful deal would bring its ownership in line with the country’s other major airports which are owned by consortia of infrastructure investors, primarily pension funds.
Record-low interest rates have prompted pension funds and their investment managers to chase higher yields. The purchase, with an enterprise value of A$30 billion including debt, would allow them to reap financial benefits when borders reopen and travel demand rebounds.
If successful, the purchase would be one of the country’s largest-ever by enterprise value in U.S. dollar terms, on par with the $22 billion purchase of mall operator Westfield Group by Unibail-Rodamco in 2017, Refinitiv data showed.
Bloomberg News last week reported a consortium led by Macquarie Group was considering a rival offer, citing unidentified sources. The reports added talks were at an early stage and Macquarie could also consider joining the Sydney Aviation Alliance.
($1 = 1.3407 Australian dollars)
(Reporting by Jamie FreedEditing by Chris Reese and Karishma Singh)
