Sydney Airport (ASX:SYD) jumps 37% on $22.6 billion buyout bid

Shares in Australia’s largest airport operator are flying high on the news this morning.

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The Sydney Airport (ASX: SYD) share price is rocketing this morning after the company announced that a consortium of infrastructure investors had proposed a $22.6 billion all-cash transaction for the buyout of Sydney Airport.

The Sydney Airport share price has started this morning’s session with a 37% jump into the green after the opening bell, before retreating slightly to the current price of $7.71, up 32.62%.

Let’s dive into what unfolded this morning.

What is the proposed deal?

In today’s release, the company advised that a consortium of infrastructure-focused investors from IFM Investors, Global Infrastructure Management and QSuper had offered $8.25 per share for a buyout of the famed Australian airport.

At these figures, the offer price represents a 42% premium on Sydney Airport’s closing price of $5.81 at the bell on Friday.

Sydney Airport also holds debt valued at close to $10 billion on its balance sheet — which the consortium must absorb — taking the company’s enterprise value to $30 billion and change.

The investor consortium mentioned its deal included a number of conditions. These included:

  • UniSuper to reinvest its roughly 15% stake into the holding vehicle;
  • Sydney Airport to provide access to the company books;
  • A unanimous recommendation from the Sydney Airport boards that securityholders back the proposal; and
  • Entry into a mutually acceptable scheme implementation deed between Sydney Airport and a company owned by the consortium members.

A move to proceed with the sale would align Sydney Airport with Australia’s other major airport operators, which are owned by consortiums of infrastructure investors.

What did Sydney Airport say?

Sydney Airport was quick to respond, claiming that the offer sat below its pre-pandemic share ranges when it hit a record high of $8.86 back in January 2020, before the COVID-19 pandemic took its toll on global travel.

In a release, it stated:

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 unexpected short-term impact of the pandemic.

At the time of writing, Sydney Airport is considering the proposal.

Sydney Airport share price snapshot

Today’s price action has catapulted the Sydney Airport share price into the green after closing in the red over the previous 5 days. Shares in the airport are now up 40.29% over the past 12 months and have lifted 20.44% year-to-date.

At a share price of $7.73, Sydney Airport has a market capitalisation of $15.7 billion and trades at a price-to-earnings ratio of 92.

The share price is trading near its 52-week high of $8.04, and has a 52-week range of $4.99 – $8.04.

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Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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