The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is pushing higher on Monday.
In morning trade, the airport operator’s shares up 1% to $7.80.
Why is the Sydney Airport share price pushing higher?
Investors have been bidding the Sydney Airport share price higher today after providing an update on the Sydney Aviation Alliance takeover approach.
Last month the company announced the receipt of an indicative, conditional and non-binding proposal from the Sydney Aviation Alliance worth $8.25 per share.
This was unanimously rejected by the Boards of Sydney Airport less than two weeks later on the belief that it was opportunistic, undervalued the company, and was not in the best interests of shareholders.
According to today’s release, the consortium has returned, with AustralianSuper as a new member, and made an improved offer.
The release explains that the Sydney Aviation Alliance consortium has increased its offer by 2.4% to $8.45 cash per share. This represents a 9% premium to the Sydney Airport share price at Friday’s close.
Second time lucky?
Unfortunately for the consortium, it won’t be a case of second time lucky for them.
The Sydney Airport Boards have carefully considered the revised indicative proposal, including obtaining advice from their financial and legal advisers. Once again, they have unanimously concluded that the proposal continues to undervalue Sydney Airport and is not in the best interests of shareholders.
They explained: “In coming to this conclusion, the current environment does not change the Boards’ view of the long term value. The Boards also note the rapid increase and acceleration in Australian vaccination rates in recent weeks and the governments’ plans to progressively ease restrictions as the population reaches vaccination targets which will then see the re-opening of travel.”
“Sydney Airport remains strongly positioned, has strengthened its balance sheet and tightly managed costs to maintain flexibility to respond to a range of recovery scenarios and to pursue sensible growth opportunities as the recovery unfolds. At the current indicative price of A$8.45 per stapled security, the Boards continue to view the Revised Indicative Proposal as opportunistic in light of the COVID-19 pandemic,” it said.
Though, it has stated that it is open to engaging with the Sydney Aviation Alliance should the consortium be prepared to lift its indicative price to appropriately recognise long term value for Sydney Airport shareholders.
The Sydney Airport share price is 21% in 2021.