Has it been a great month so far for the Sydney Airport Holdings Pty Ltd (ASX: SYD) share price? It certainly has.
Sydney Airport shares were trading at $5.79 at the start of July (also the start of FY2022, incidentally). As of yesterday’s closing, the company was trading at $7.81 per share. That’s a 34.89% gain for Sydney Airport in the space of 16 days.
Not a bad performance at all. Especially considering this company is ‘only’ up 21.8% year to date in 2021 so far, and up 47.9% over the past 12 months.
As you might imagine, this company is not really running at its full potential right now. The ongoing pandemic, which has resulted in international (and more recently, domestic) border closures, has put a massive dent in the airport operator. In fact, Sydney Airport (a former dividend heavyweight) hasn’t paid a dividend distribution since December 2019.
So why did the company suddenly have such a month to remember?
Sydney Airport share price takes off on takeover offer, and is still flying high
Well, we don’t have to dig too deep to answer that question. On 5 July, the airport announced that a consortium of institutional infrastructure investors had put up a $22.6 billion offer to purchase 100% of all Sydney Airport shares at a price of $8.25 per share, all to be paid for in cash. These investors included QSuper, IFM Investors and Global Infrastructure Management.
This news immediately sent the Sydney Airport share price rocketing. It was up 37% at one point that day, reaching a new 52-week high of $8.04. It has since hovered close to that number, albeit a little lower on yesterday’s close.
That’s despite the fact that Sydney Airport’s board signalled its distaste for this offer from the start. On the day of the announcement, it (perhaps acerbically) pointed to the fact that Sydney Airport shares were well above the offer price prior to the emergence of the pandemic.
And just yesterday, the board came out and formally rejected the offer. As my Fool colleague Marc discussed at the time, the board told the markets that the offer “undervalues Sydney Airport and is not in the best interests of Securityholders”.
Going further, the board called the offer “opportunistic”, and suggested the bidders were attempting to capitalise on the pandemic’s effects on the company.
Even so, investors have not bid the shares significantly lower since. In fact, the Sydney Airport share price is up more than 1% since last Friday.
At yesterday’s closing share price, Sydney Airport has a market capitalisation of $21.08 billion.