The board of Sydney Airport Holdings has opted to reject last week’s offer of US$16.6 billion for Sydney Airport, which represented a 42% premium on the pandemic-affected value of the company. The offer came from the Sydney Aviation Alliance, a consortium comprising IFM Investors, QSuper, and Global Infrastructure Partners.
Sydney Airport Holdings said on Thursday that it recognized its share price was likely to trade below the consortium’s indicative price in the short-term but said it would only accept a buyout deal that would “deliver and recognize appropriate long-term value.”
Currently, low interest rates are forcing investment and pension funds to seek higher yields, so the market is primed for a flurry of interest in similar infrastructure enterprises. If successful, the offer would have brought Sydney Airport in line with Australia’s other major airports which are all owned by consortia of infrastructure investors, primarily pension funds. Sydney Airport Holdings is currently Australia’s only listed airport operator. Any successful sale of the airport would require approval from the Foreign Investment Review Board and Australia’s competition regulator. While IFM Investors and QSuper are Australian companies, Global Infrastructure Partners is North American.
In addition, IFM Investors has holdings in other major Australian airports and would likely have to sell down a portion of those stakes due to cross-ownership rules. According to Bloomberg News, a consortium led by Macquarie Group was considering a rival offer, or it might consider joining the Sydney Aviation Alliance.
