Sydney Airport gets US$17 billion takeover offer

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Sydney Airport. (PHOTO: Kurt Ams via SITA)

Sydney Airport said on Monday (5 July) that it has received a A$22.3 billion (US$17 billion) takeover offer from a group including IFM Investors acting as trustee for IFM Australian Infrastructure Fund, Conyers Trust Company (Cayman) Limited as trustee for IFM Global Infrastructure Fund, QSuper Board (formerly the Board of Trustees of the State Public Sector Superannuation Scheme) as trustee for QSuper (formerly the State Public Sector Superannuation Scheme) and Global Infrastructure Management, LLC (on behalf of its managed and advised clients and funds).

The consortium offered A$8.25 a share, Sydney Airport said in a statement. The airport said it is assessing the proposal, which is 42 percent higher than Friday’s closing price of A$5.81. The stock traded close to A$9 in late 2019, before the COVID-19 pandemic devastated aviation. Sydney Airport has appointed Barrenjoey and UBS as its financial advisers and Allens as its legal adviser.

“The indicative proposal has been made during a global pandemic which has deeply affected the aviation industry and the Sydney Airport security price,” the airport said in its statement. “The indicative price is below where Sydney Airport’s security price traded before the pandemic. The boards are undertaking detailed analysis of, among other things, whether the proposal is reflective of the underlying value of the airport given its long-term remaining concession and the expected short-term impact of the pandemic.”

The takeover offer has been made on the basis of a number of conditions, including:

  • UniSuper Ltd, which holds approximately 15 percent of Sydney Airport’s total securities, agreeing that it would reinvest its equity interest in Sydney Airport for an equivalent equity interest in the consortium’s holding vehicle rather than receiving the cash consideration under the schemes;
  • Provision by Sydney Airport of due diligence, and, if provided, satisfactory completion of that due diligence by the consortium;
  • Approval from each of the investment committees of the consortium members;
  • A unanimous recommendation by the Sydney Airport Boards that security holders vote in favour of the schemes of arrangement in the absence of a superior proposal, subject to an independent expert concluding that the indicative proposal is in the best interests of security holders; and
  • Entry into a mutually acceptable scheme implementation deed between Sydney Airport and a company owned by the consortium members. Any scheme implementation deed would also be subject to a number of conditions, including Sydney Airport Securityholder approval, and court and regulatory approvals (including FIRB and ACCC).

The suitors are seeking to capitalise on the slump in market value at Australia’s largest airport, which is also the country’s main overseas gateway, before global travel starts to pick up. Australia’s international border, which has been mostly closed since March last year, is expected to open in mid-2022 after the nation’s vaccination programme is completed.

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