The Sydney Airport (ASX: SYD) share price is pushing higher on Monday.
In afternoon trade, the airport operator's shares are up almost 3% to $8.45.
Why is the Sydney Airport share price taking off?
As reported by my Fool colleague this morning, the catalyst for the rise in the Sydney Airport share price today has been the release of an update on a takeover approach.
According to the release, Sydney Airport has accepted an offer of $8.75 per share from a consortium of investors led by IFM Investors and Global Infrastructure Partners. This compares favourably to the initial offer by the consortium, known as the Sydney Aviation Alliance, of $8.25 per share made in July.
The latest offer values Sydney Airport at $23.6 billion on an equity basis and $32 billion on an enterprise value basis.
What's next?
Sydney Airport's board has unanimously recommended its shareholders vote in favour of the deal. This is in the absence of a superior proposal and subject to an independent expert concluding that the deal is in the best interests of Sydney Airport shareholders.
Subject to those same qualifications, each member of the Sydney Airport Board intends to vote all shares held or controlled by them in favour of the deal.
Sydney Airport's Chairman, David Gonski AC, commented: "Today's announcement is the culmination of months of engagement between all parties. The Sydney Airport Boards believe the outcome reflects appropriate long-term value for the airport, and unanimously recommend the proposal to securityholders, subject to customary conditions such as independent expert approval and no superior proposal."
Why are its shares trading below the offer price?
With the Sydney Airport share price currently fetching $8.45, it is trading at a 3.3% discount to the offer price.
This is likely to be due to there still being a number of hurdles for the deal to overcome before completion.
The transaction is conditional on the aforementioned independent expert's report, approval from 75% of the company's shareholders, the thumbs up from the competition regulator, and authorisation by the Foreign Investment Review Board. The latter is a process that could take several months to complete.
The Sydney Airport share price is likely to gravitate nearer to the offer price as and when these conditions are met.
For now, the company's shares are up approximately 32% in 2021.
