The consortium bidding for Sydney Airport says it is extremely disappointed with the rejection of its latest offer at $A8.45 per share and the failure of the airport’s board to engage with it.
The Sydney Aviation Alliance put the revised proposal to the board on August 13 but received short shrift and the airport advised the ASX of its rejection Monday.
Sydney Airport said its boards had carefully considered the proposal but concluded it continued to undervalue the airport and was not in the best interest of security holders.
The stance comes after a similarly blunt rejection in July of its previous bid of $A8.25 per share.
The airport statement noted the rapid acceleration and increase in Australian vaccination rates in recent weeks and government plans to progressively ease restrictions.
“Sydney Airport remains strongly positioned, has strengthened its balance sheet and tightly managed costs to maintain flexibility to respond to a range of recovery scenarios and to pursue sensible growth opportunities as the recovery unfolds,’’ it said.
“At the current indicative price of $A8.45 per stapled security, the Boards continue to view the revised indicative proposal as opportunistic in light of the COVID-19 pandemic.”
But the Australian-led consortium —made up of AustralianSuper, IFM Australian Infrastructure Fund, QSuper, the IFM Global Infrastructure Fund and Global Infrastructure Partners — said the offer represented a significant premium to the $5.75 closing price before its original bid.
It argued Sydney Airport already faced a weakened short and longer-term outlook due to factors such as potentially significant demand reductions due to the pandemic, the introduction of a competitor airport in Western Sydney in 2026 and expected long-term changes in business and consumer travel preferences.
It noted conditions had deteriorated since the original offer, with NSW now in a state-wide lockdown and airlines standing down staff.
“Accordingly, in the absence of the consortium’s original proposal, Sydney Airport’s security price would likely be trading materially below the $A5.75 closing price immediately before the consortium’s original proposal was announced,’’ it said.
“In contrast to the highly uncertain aviation outlook, the consortium’s revised proposal continues to involve 100 percent cash consideration and certainty of value.”
However, the consortium conceded it was unlikely the parties could agree on a path forward after the rejection of its latest proposal and the view it was opportunistic.