The boards of Sydney Airport (ASX: SYD) have left an opportunistic takeover bid on the tarmac after concluding the $22 billion offer is not in the interests of shareholders.
Last week a consortium comprising IFM Investors, QSuper and Global Infrastructure Management, LLC offered to buy the ASX-listed airport at $8.25 per share, on the condition that existing shareholder Unisuper would reinvest its 15 per cent holding back in.
The proposal represents a significant 42 per cent premium to the SYD share price the day before it was announced, but is still below the $9 mark SYD shares had seen in late 2019 before the pandemic began.
In a response released today, the Sydney Airport boards conclude the indicative proposal undervalues the asset on several grounds, including its "strategic and irreplaceable" nature as one of the country's most important infrastructure assets and Australia's gateway to international travel.
They also highlight "opportunistic timing" of the proposal given the significant impact of the COVID-19 pandemic on Sydney Airport's performance.
"The indicative price is below where Sydney Airport's security price traded before the pandemic," the boards said.
The leadership also highlights numerous other benefits such as total passenger growth of 2.9 per cent on a compound annual growth basis between FY15 and FY19, the diversity of earnings given the mix of its core aeronautical business with high-yield retail, property, car parking and ground transport, as well as the significant value of land assets and the potential for developing further on-airport commercial property opportunities.
"Sydney Airport is strongly positioned to deliver growth as vaccination rates increase and we move into the post pandemic recovery period," the boards said.
"It has rapidly adapted to the COVID environment, strengthening its balance sheet, and tightly managing costs to maintain flexibility to respond to a range of recovery scenarios and pursue sensible growth opportunities as the recovery unfolds.
"The boards recognise that the security price is likely to trade below the consortium proposal's indicative price in the short term, however Sydney Airport will only progress a change in control transaction on terms that deliver and recognise appropriate long term value for Sydney Airport securityholders."
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