Why were Sydney Airport (ASX:SYD) shares still making news this week?

Sydney Airport departed from the ASX boards this week.

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Key points

  • Sydney Airport was delisted from the ASX this week
  • Shareholders received $8.75 cash per share
  • The company was continuing to face COVID-19 uncertainty before it delisted

Sydney Airport (ASX: SYD) shares made news this week one last time as an ASX company.

On 10 March 2022, Sydney Airport shares were removed from the official list after the acquisition of the business by Sydney Aviation Alliance.

Sydney Airport takeover implemented

The business has been taken over by a consortium comprising of entities associated with AustralianSuper, IFM Australian Infrastructure Fund, QSuper, IFM Global Infrastructure Fund and Global Infrastructure Partners.

The takeover price for Sydney Airport was $8.75 for each share. That cash was sent to Sydney Airport shareholders on 9 March 2022.

However, UniSuper, which owned approximately 15% of Sydney Airport, will receive an approximate 15% interest in the holding company of the bidder, so that it will retain its interest.

Sydney Airport’s directors David Gonski, John Roberts, Stephen Ward, Ann Sherry, Grant Fenn and Abi Cleland have all resigned.

The directors decided to unanimously recommend that shareholders vote in favour of the takeover.

Why was the takeover attractive?

The Sydney Airport board pointed out that the offer of $8.75 per security represented a significant premium to Sydney Airport’s recent historical trading price. It represented a 50.6% premium to the closing price of the shares on 2 July 2021, being the last day before the announcement of the first bid.

It was also pointed out that there are several risks with the airport’s business and operations, whilst the cash offer provided certainty.

Some of those risks included:

  • The ongoing impact of COVID-19
  • Competition from Western Sydney Airport in the future
  • Uncertainty about future aeronautical and commercial revenue
  • The need for significant future capital expenditure in order to grow capacity at the airport
  • Uncertainty about the future distribution profile
  • Risks with Australia and China’s geopolitical relationship

Last travel update

A couple of months ago, the company told investors about its passenger update for December 2021. In that month, it saw 1.2 million passengers, which was down 69.7% on December 2019, but up 70.4% on December 2020.

Domestic passengers amounted to 949,000 in December 2021 – down 59.6% on December 2019. This was an increase of 44% on December 2020.

There were 248,000 international passengers that travelled through Sydney Airport, down 84.5% on the corresponding period in 2019. The business said that traffic was lower in December because of reduced demand cancellations and lower load factors due to the Omicron outbreak.

For the first 15 days of January, provisional data indicated that international passenger traffic was down approximately 85% and domestic passenger traffic was down approximately 58% compared to the corresponding period in 2019.

The business said that the outlook for passenger traffic continued to remain subdued due to tightly controlled inbound international travel, entry requirements and restrictions into key overseas markets, and the significant domestic flight cancellations announced for the first quarter of 2022.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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