Sydney Airport Holdings Pty Ltd said on Monday a consortium of infrastructure investors had proposed a A$22.26 billion ($16.7 billion) cash buyout of the operator of Australia’s biggest airport, sending its shares up as much as 38%.
If successful, it would be the biggest such deal in Australia this year, eclipsing the $8.1 billion spin-offs of Endeavour Group Ltd and Star Entertainment Group Ltd’s (SGR.AX) $7.3 billion bid for Crown Resorts Ltd.
A consortium comprised of IFM Investors, pension fund QSuper and Global Infrastructure Management have offered A$8.25 per Sydney Airport share, a 42% premium to the stock’s closing price on Friday, the airport operator said.
Its shares were trading at as much as A$8.04 on Monday morning, though they later fell back to around A$7.68.
Sydney Airport noted the offer is below its pre-pandemic share price and said it was reviewing the proposal, which is contingent on allowing access to due diligence and recommending it to shareholders in the absence of a superior offer.
The airport operator’s share price hit a record high of A$8.86 in January last year, before the pandemic led to a collapse in travel demand.
The company is Australia’s only listed airport operator. A successful deal would bring its ownership in line with the country’s other major airports which are owned by consortia of infrastructure investors with long-term investment horizons.
The offer comes at a time when Australia’s international borders are widely expected to remain closed until at least the end of the year due partly to a slower novel coronavirus vaccination program than in most developed countries. read more
Domestic travel has also been severely disrupted by a two-week lockdown in Sydney during the normally busy school holiday period, after an outbreak of the highly contagious Delta variant of COVID-19. Other states have closed borders to Sydney residents.
In May, Sydney Airport’s international traffic was down more than 93% versus the same month of 2019, while domestic traffic was down 39.2%.
The airport has long held a monopoly on traffic to and from Australia’s most populous city, but that is due to end in 2026 with the opening of Western Sydney Airport.
IFM, QSuper and Global Infrastructure did not immediately respond to Reuters’ requests for comment.
IFM holds stakes in major Australian airports in Melbourne, Brisbane, Perth and Adelaide. QSuper owns a stake in London’s Heathrow Airport and Global Infrastructure is invested in London’s Gatwick and City airports.
Their offer is contingent on UniSuper, the airport’s largest shareholder with a 15% stake, agreeing to reinvest its equity interest for an equivalent equity holding in the consortium’s vehicle, Sydney Airport said.
UniSuper, which also holds stakes in Adelaide and Brisbane airports, did not respond to a request for comment.
Sydney Airport said it had hired Barrenjoey and UBS as financial advisers.
Shares in New Zealand’s Auckland International Airport Ltd, the only other listed airport operator in Australasia, were trading nearly 6% higher on Monday morning.