Sydney Airport’s board has finally opened its books to a consortium led by IFM Investors after the bidders boosted their takeover proposal a third time to $8.75 per share and said it would recommend the offer if it is formalised.
As reported by Street Talk, the airport will grant the consortium, which also includes New York-based Global Infrastructure Partners (GIP), QSuper and AustralianSuper access to due diligence after the takeover proposal for company, initially pitched at $8.25 per share in early July, was raised twice.
The most recent offer values the airport at $23.6 billion.
The due diligence, which is expected to take about a month, will be non-exclusive, meaning that the airport remains open to other takeover offers.
If the airport receives a binding offer from the consortium at $8.75 per share, and it is recommended by an independent expert and no other competing bid is received, the board will unanimously recommend investors accept it.
The consortium said it was keen to finalise a transaction but the competition watchdog has already warned that it will take an extremely close look at any recommended offer, given the funds in the consortium own stakes in other Australian airports.
IFM and GIP would be Sydney Airport’s two biggest shareholders if their takeover bid succeeds but have not revealed the exact size of their proposed stakes, or how exactly they would allocate their investments.
The Airports Act also requires that Australia’s biggest airports have no more than 49 per cent foreign ownership and the Foreign Investment Review Board will also examine the proposed deal.
Investors have been urging the airport’s board to engage with the IFM consortium after the company received two initial takeover proposals, the second of which was priced at $8.45 per share.
Sydney Airport’s biggest investor, UniSuper – which holds a 15.3 per cent stake – said the company’s outright rejection of the second offer was “disappointing”.
UniSuper would keep its equity stake in Sydney Airport if the consortium’s takeover proposal succeeds as part of conditions for a scheme of arrangement outlined by the bidders.
The airport said the consortium’s previous offers were opportunistic, given they have emerged during some of the worst periods of the COVID-19 pandemic, when most domestic flights as well as international flights in and out of Australia are grounded.