Sydney Airport has rejected a second higher takeover bid from the Sydney Aviation Alliance, after receiving a revised indicative, conditional and non-binding proposal – stating the offer undervalues the airport.
The Revised Indicative Proposal provides for an acquisition, by way of scheme of arrangement and trust scheme, of 100 per cent of the stapled securities in Sydney Airport at an indicative price of A$8.45 cash per stapled security, up from the former offer of $8.25.
The Sydney Aviation Alliance is an Australian-led consortium that currently consists of the IFM Australian Infrastructure Fund, AustralianSuper, QSuper, the IFM Global Infrastructure Fund and Global Infrastructure Partners (collectively known as the Consortium).
The terms and conditions of the Revised Indicative Proposal are otherwise consistent with the original indicative proposal received from the Consortium on 5 July 2021, which was unanimously rejected by the Boards of Sydney Airport on 15 July 2021.
The Boards have carefully considered the Revised Indicative Proposal, including obtaining advice from financial and legal advisers.
At the current indicative price of A$8.45 per stapled security, the Boards continue to view the Revised Indicative Proposal as opportunistic in light of the COVID-19 pandemic.
The Boards state that they have unanimously concluded that the proposal continues to undervalue Sydney Airport and is not in the best interests of security holders.
In coming to this conclusion, the current environment of travel bans and COVID-19, does not change the Boards’ view of the long term value.
Additionally, as outlined in Sydney Airport’s previous announcement, there are a number of factors that the Boards have taken into account, including:
- The strategic and irreplaceable nature of Sydney Airport as a world class airport and one of Australia’s most important infrastructure assets – Sydney Airport is Australia’s largest airport and is the gateway to international travel in and out of Australia
- Sydney Airport is a well managed and capitalised asset
- Sydney Airport’s consistent delivery of value to security holders with a total shareholder return of 19 per cent (annualised) from FY15-19 and total passenger growth of 2.9 per cent (CAGR) over the same period
- The diversity of Sydney Airport’s earnings, with the core aeronautical business supported by a high yield retail offering as well as property, car parking and ground transport revenues
- The value of Sydney Airport’s land assets and potential to create additional value through further development of on-airport commercial property opportunities
The Boards have stated they are open to engaging with the Sydney Aviation Alliance, should it be prepared to lift its indicative price to what they deem appropriately recognises long term value for Sydney Airport security holders.
The Boards also note the rapid increase and acceleration in Australian vaccination rates in recent weeks and the governments’ plans to progressively ease restrictions as the population reaches vaccination targets, which will then see the re-opening of travel.
Sydney Airport stated it has strengthened its balance sheet and tightly managed costs to maintain flexibility, and remains strongly positioned to be able to respond to recovery scenarios and to pursue sensible growth opportunities as the recovery unfolds.
Consistent with the Indicative Proposal announced on 5 July 2021, if the transaction were to proceed, it is proposed that UniSuper would receive an equivalent equity interest in the Consortium’s holding vehicle rather than cash consideration.
The indicative price would be reduced by the value of any distributions declared or paid by Sydney Airport prior to the schemes taking effect.