Sydney Airport share price: where next following $22.3bn takeover bid?

The Sydney Airport share price opened 37% higher on Monday after the company announced it had received a non-binding takeover proposal.

A long list of qualifiers would follow, with the company noting that the takeover offer was unsolicited, indicative, conditional and non-binding. The takeover offer is for $8.25 per share, a significant premium to where the stock traded last Friday.

That offer price values the iconic Australian airport at approximately $22.3 billion.

The takeover offer was made by a consortium of infrastructure investors, including: IFM Investors, Conyers Trust Company, QSuper Board and Global Infrastructure Management.

Sydney Airport management has appointed Barrenjoey and UBS as financial advisers on the deal, and Allens as its legal advisor.

While no timeline was specified, the company noted that its Board has commenced assessing the merits of the takeover offer.

Is the offer opportunistic?

While the market responded with understandable enthusiasm to the takeover offer, Sydney’s management team appeared to strike a more sceptical tone.

The Board made the point to stress that Sydney Airport is a 'world class airport and one of Australia's most important infrastructure assets.' This was followed up by noting that the offer price of $8.25 per share sits below where the stock was trading at before the pandemic.

As such, it was noted that 'The Boards are undertaking detailed analysis of, amongst other things, 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.’

Indeed, speaking to the impact of the pandemic, across May the company said it had witnessed a 93% decline (on a PCP basis) in international passenger traffic. Domestic passenger traffic was down a less pronounced 39.2%.

There is no certainty, the company noted, that this takeover proposal will result in a transaction.

By noon the stock had drifted from its open price, trading around the $7.50 per share mark, still up it should be noted, 29% for the session.

Over the last year the stock is up 38%.

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Conditions that need to be met: where next

With the offer being conditional, management outlined a number of conditions that would have to be met for the transaction to proceed.

Chief among these was noting that it would require UniSuper, which currently holds a 15% stake in the airport, to agree to reinvest its stake in Sydney Airport, for what was described as 'an equivalent equity interest in the Consortium’s holding vehicle.'

Beyond that, approval from Sydney's shareholders, the courts, and regulators; among a number of other requirements, were also flagged.