Sydney Airport share price on watch following refreshed takeover bid

‘The current intention of the Boards is to unanimously recommend that securityholders vote in favour of the proposal.’

A shiny new offer

Sydney Airport's Board looks to have warmed to the idea of a takeover.

As we had written previously, the Board had knocked back successive takeover offers – at $8.25 per share and $8.45 per share, respectively, on the basis that they undervalued the business. The impression very much was that the consortium of infrastructure investors bidding for the airport were being ‘opportunistic’.

The implication of course, that in a post-covid world – when things have normalised – Sydney Airport’s ‘real’ value will shine through.

Everyone has a price though. On Monday it was revealed that the consortium of infrastructure investors had upped their bid from $8.45 per share to $8.75 per share.

That offer was enough to get the consortium a closer look at Sydney’s books, with the Board noting that they would allow the prospective buyers a chance to conduct due diligence, on a non-exclusive basis.

That due diligence is expected to take around a month to complete.

Should that due diligence result in a binding offer of $8.75 per share, Sydney Airport’s Board said, at this current stage and assuming a number of other hurdles are met and a superior offer did not emerge, that it would accept such an offer.

'The current intention of the Boards is to unanimously recommend that securityholders vote in favour of the proposal in the absence of a superior proposal and subject to an independent expert concluding that the proposed transaction is in the best interests of Sydney Airport securityholders.'

The Board did of course stress that these discussions – including the prospect of due diligence and the current intention to recommend a potential binding offer – do not assure the certainty that such an offer may eventuate.

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Sydney Airport share price

Even so, the market responded optimistically to these developments: by 10:23AM Sydney Airport’s share price was up 4.88% to $8.39 per share. At those price levels, the stock is up 30.89% since January.

Results revisited

This comes as Sydney Airport continued to struggle financially, with the pandemic severely impacting its operational performance in H1 FY21.

On the top-line, the airport saw its revenue slump, coming in at $341.6 million, implying a year-on-year decrease of 33.2%.

Operating expenses hit $74.2 million, down 7.8%; but the company nonetheless posted positive interim earnings (EBITDA) of $210.8 million.

Post-tax earnings were another thing, mind you. The airport revealed a loss of $97.4 million on that basis for the half-year.

Commenting on those results, the airport’s CEO Geoff Culbert, said:

'It was a challenging six months, but we were encouraged to see passenger traffic rebound strongly every time borders were open.'

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