The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price is going nuts today after receiving a takeover offer from a consortium including IFM.
Sydney Airport’s takeover offer
The company said that it has received an unsolicited, indicative, conditional and non-binding proposal from a consortium of infrastructure investors to buy the business.
This takeover offer came from a group which included IFM investors and QSuper.
The offer is an indicative price of $8.25 cash per share. It’s subject to a number of conditions such as satisfactory due diligence, a unanimous recommendation by the Sydney Airport boards and securityholders and so on.
There’s also a condition that UniSuper, which holds approximately 15% of the total securities, agreeing that it would reinvest its equity interest in Sydney Airport for an equivalent interest in the consortium’s holding vehicle, rather than receiving the cash consideration under the scheme.
The initial response
The business said that the boards have commenced an assessment of the proposal.
The boards noted that Sydney Airport is a world class airport and one of Australia’s most important infrastructure assets. It’s Australia’s largest airport and is the gateway to international travel in and out of Australia.
It was also noted that:
“The indicative proposal has been made during a global pandemic which has deeply affected the aviation industry and the Sydney Airport security price. The indicative price is below where Sydney Airport’s security price traded before the pandemic. The Boards are undertaking detailed analysis of, amongst 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.”
Summary thoughts on Sydney Airport and the share price
This is an interesting conundrum for investors and the leadership.
The offer is a 42% premium to the last share price. The current price is reflective how much Sydney Airport’s earnings have been hurt by COVID-19. And it doesn’t seem like it’s going to be fixed any time soon considering Australia’s international borders remain shut.
If I were a shareholder I would be interested in taking this offer. Who knows how long it’s going to take for normal passenger numbers to resume? There are other ASX dividend shares making profits and paying dividends already.
