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Sydney Airport rejects revised $22.8bn takeover bid

written by Hannah Dowling | August 16, 2021

Sydney Airport has again rejected a takeover bid, now worth $22.8 billion, arguing the revised offer “continues to undervalue” the company.

The newly-upped $8.45-per-share bid, presented by Sydney Aviation Alliance Group, is up 2.5 per cent from the investment consortium’s previous “opportunistic” bid of $8.25, made in July.

In a statement to the ASX, the airport stated its board has again “unanimously concluded” that the revised offer undervalues the company and is “not in the best interests of securityholders”.

Similar to the previously rejected bid, the airport stated that the current COVID-19 operating environment “does not change the board’s view of the long-term value” of the airport.


Further, the board said that the airport is “strongly positioned” given Australia’s “rapid increase and acceleration” of its vaccination rollout is likely to see conditions improve and the re-opening of borders.

Despite the rejection, the airport noted that it was “open to engaging” with the consortium, should the group be prepared to increase its bid.

On Friday, Sydney Airport securities closed at $7.75 per share, giving it a market value just below $21 billion, however the airport’s pre-pandemic value soared above $9 per share.

The offer was presented by the newly-expanded Sydney Aviation Alliance Group – a consortium of industry investors which includes IFM Investors, QSuper and Global Infrastructure Partners, as well as new member AustralianSuper.

The group’s previous bid of $8.25 was swiftly rejected by the airport’s operator, and labelled as “opportunistic” in light of the global pandemic and border closures.

The decision was widely expected given the airport initially played down the 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 appropriate long-term value for Sydney Airport securityholders,” said the business at that time.

“The boards and management will continue to operate the airport with the objective of maximising long-term securityholder value.”

The rejection comes after the airport announced in February a full-year loss of $145 million, down from a $403 million profit a year earlier.

Upon announcing its full-year results earlier this year, the business revealed the COVID pandemic caused traffic to fall 75 per cent compared with 2019, at 11.2 million, however that dropped to 93 per cent after March 2020.

The airport also made around 20 per cent of its total workforce redundant in August 2020.

Despite the slump, chief executive Geoff Culbert said then he was “cautiously optimistic” that the industry would recover this year.

“As difficult as the crisis has been, I’m proud of the way we kept the airport open as an essential service and protected the business and everyone who works across the airport precinct,” said Culbert.

“We moved quickly to control the things that were in our control and put ourselves in a position to manage the unpredictability and volatility that became our ‘new normal’. The actions we took, combined with the COVID-19 vaccines rolling out, mean we have laid the foundation for our recovery through 2021 and beyond

“The recovery won’t be linear, but our experience shows that when restrictions are eased and borders come down, people are keen to travel.

“We take great confidence from our financial and operational response to COVID-19, which puts us in a strong position to manage through to the recovery and make the most of it when it arrives.”


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