Sydney Airport Holdings Pty Ltd (ASX: SYD) shares have had a monumental week so far on the back of a proposed acquisition by a consortium of infrastructure investors and a super fund.
The Sydney Airport share price soared 33.9% on Monday after the indicative takeover proposal was released to the market. After finishing Friday's previous session at $5.80, it reached $8.04 in intraday trade on Monday before closing at $7.78.
The airport's share price dropped slightly, finishing Tuesday's trade at $7.71. That's still 32.9% higher than Friday's close.
But does the $8.25 per share – roughly $22 billion in total – offered to Sydney Airport's shareholders take the true value of the airport into consideration? Let's take a look.
Are shareholders being ripped off?
Sydney Airport is one of only a handful of listed airports in the world. It sits 8 kilometres from the Sydney CBD, owns 7 hectares of land, and has what is effectively a 99-year lease which was signed in 2018, on the other 900 hectares it occupies.
It also has an approved commercial development plan that could see 2 hectares of business facilities built alongside its international terminal.
Right now, the Sydney Airport has a market capitalisation of around $21 billion.
However, in December 2019, while reports of a virus that would go on to be dubbed COVID-19 were beginning to swirl, the Sydney Airport share price hit an all-time high of $9.20.
If its share price was to reach that price again, the Sydney Airport's market capitalisation would be roughly $24.8 billion.
According to reporting by the Financial Review, numerous experts agree that the offered amount is taking advantage of the pandemic's effects and fails to account for the airport's underlying worth.
The publication also claims the consortium might have to up its offer to convince one of Sydney Airport's major shareholders, UniSuper. UniSuper owns roughly 15% of the company's shares. The consortium's offer is conditional upon it continuing to hold that level of investment in the airport.
Sydney Airport has yet to respond to the buyout offer. The question of whether its board believes the offer undervalues the airport will be answered in due time.
Sydney Airport share price snapshot
2021 hasn't been a great year for ASX travel shares. Luckily, the Sydney Airport share price's recent bump has herded it back into the green.
Currently, shares in Sydney Airport are 20% higher than they were at the beginning of this year. They have also gained 44% since this time last year.
