The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is currently down 0.3% (after being up in the morning). The board of the airport operator is expected to reject the takeover offer for the business.
What is the takeover offer?
Just over a week ago, it was revealed that Sydney Airport had received an unsolicited, indicative, conditional and non-binding proposal from a consortium of infrastructure investors to acquire the whole business.
The offer price was $8.25 cash per share.
A consortium of investors was behind the offer. It included IFM, QSuper and Global Infrastructure Management.
At the time of the ASX announcement, the Sydney Airport boards had commenced an assessment of the proposal and made the following points:
The Sydney Airport Boards note that Sydney Airport is a world class airport and one of Australia’s most important infrastructure assets. Sydney Airport is Australia’s largest airport and is the gateway to international travel in and out of Australia.
The indicative proposal has been made during a global pandemic which has deeply affected the aviation industry and the Sydney Airport security price. The indicative price is below where Sydney Airport’s security price traded before the pandemic. The boards are undertaking the value of the airport given its long-term remaining concession and the expected short-term impact of the pandemic. The boards will update securityholders accordingly.
Sydney Airport offer to be reportedly rejected
According to reporting by the Australian Financial Review, the board is meeting to today to talk about whether to accept the takeover approach by the consortium.
That board will reportedly be advised by the people from Barrenjoey and UBS who are providing help on the bid.
The AFR reported that the offer is highly likely to be rejected, though that hadn’t been fully decided yet.
Whilst the offer was made at a 42% premium to the closing share price at the time, the leadership reportedly believe that it’s only because of the travel restrictions that the Sydney Airport share price is trading at a lower level.
More offers to come?
According to reporting by the Australian Financial Review, there could be another bid to come from a consortium led by Macquarie Group Ltd (ASX: MQG) which could try to put in a counter offer to the first bid.
The global investment bank has reportedly been communicating with potential partners such as superannuation funds and funds managed by Macquarie Infrastructure & Real Assets (MIRA). Macquarie is reportedly only considering a bid at this stage.
The IFM consortium could also come back with a higher bid that may be acceptable by the board of Sydney Airport.