Sydney Airport share price: where next as Board rejects $22bn takeover bid?
Sydney’s Board on Thursday revealed it would reject the recent takeover bid for the airport, while stressing their focus is on long-term value creation.
Sydney Airport's Board on Thursday updated the market in relation to the recent takeover bid for the company.
For reference, that takeover offer – made by consortium of infrastructure investors in early July – was for $8.25 per share, valuing the airport at around $22 billion.
Since then, the market has been carefully waiting for a response from Sydney’s Board.
And after carefully considering the offer, the Board on Thursday said it had unanimously concluded that the offer both undervalues the company and that it was not in the best interest of shareholders. As a result, the Board said it would be rejecting the offer from the consortium.
No surprises here
Looking over Sydney’s initial response to the takeover bid, this decision is not the most surprising one.
When the offer was first made, we wrote that the airport's management team struck a somewhat sceptical tone in relation to the offer, at the time stressing that Sydney Airport is a 'world class airport and one of Australia's most important infrastructure assets.' It was also pointed out that the offer price of $8.25 per security is below where the stock traded at on a pre-pandemic basis.
The market seems to have been equally unsurprised by the reveal that the company would not be accepting the takeover offer. The stock did not crash, rather is slipped just 1.6% at the open. By 11 am, the stock was in the green!
Is the market anticipating that the consortium of infrastructure investors will up their offer? Only time will tell.
Do you have a view on Sydney Airport? Whatever you think, you can use CFDs to trade stocks and other assets, through IG’s world-class trading platform.
For example, to buy (long) or sell (short) Sydney Airport today using CFDs, follow these easy steps:
- Create an IG Trading Account or log in to your existing account
- Enter ‘SYD’ in the search bar and select it
- Choose your position size
- Click on ‘buy’ or ‘sell’ in the deal ticket
- Confirm the trade
For investors not looking to trade stocks, you can invest in shares directly through our share trading service.
Why reject the offer?
The Board spun off a number of reasons why it would not be accepting the consortium’s offer, with some of the most prominent reasons including:
- Reiterating that the takeover offer was opportunistic in nature, as it sits below where the stock traded at prior to the pandemic
- Noting that as a listed entity the company has historically delivered strong value to shareholders
- Highlighting that there remains potential value creation opportunities 'through further development of on-airport commercial property’
- And stressing that the company is well-placed to benefit from the easing of global restrictions once greater levels of vaccination had been achieved
Despite highlighting those reasons to reject the consortium’s offer in its current form, the door was not shut completely on potentially accepting a future, higher takeover bid.
'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 long-term value' for shareholders.
The Board said it remains squarely focused on maximising long-term value for shareholders.
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.