Sydney Airport Rejects $16.6 Billion Takeover Bid as Too Low

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Jul 15 2021, 4:07 AMJul 15 2021, 2:52 PMJuly 15 2021, 4:07 AMJuly 15 2021, 2:52 PM

(Bloomberg) -- Sydney Airport rejected a A$22.3 billion ($16.6 billion) takeover offer from a group of infrastructure investors as too low, saying Australia’s busiest airport is well placed to recover from the pandemic.

While the A$8.25 a share offer from a group of pension funds led by IFM Investors was pitched at a 42% premium to Sydney Airport’s share price, it was below where the stock was trading at before the pandemic crushed global aviation. Australia’s borders have mostly been shut since March 2020, and are unlikely to open before mid-2022.

The offer “undervalues Sydney Airport and is not in the best interests” of shareholders, the company said in a statement Thursday. “Sydney Airport is strongly positioned to deliver growth as vaccination rates increase and we move into the post-pandemic recovery period.”

In outlining its reasons for rejecting the offer, the board cited:

The “strategic and irreplaceable nature” of Sydney Airport
The “opportunistic” timing of the bid, given the “significant impact” of the pandemic on the airport’s performance
The diversity of its earnings, with the core business supported by a high-yield retail space, car parks and ground transport
The “significant” value of its land assets, which offer commercial property development opportunities

The airport owner didn’t rule out further talks with the bidders but said it would only entertain a deal that recognizes appropriate long-term value for shareholders.

The response underscores the skepticism corporate boards have about committing to deals amid an uncertain economic outlook, which is especially pronounced in sectors such as travel and leisure in a nation that has fallen behind other developed nations in combating Covid-19.