Sydney Airport: Takeover Bid

Sydney Airport has just been offered $22.3 billion in a takeover offer by a group including IFM, QSuper, and Global Infrastructure Management – already a holder of airport assets.

Preditors are swooping on pandemic distressed travel assets, trying to pick up a bargain. Given Australia’s appalling roll-out of its vaccination program – distressed travel assets are going to be barely alive without much kicking and available for quite some time.

Sydney Airport, as the main gateway to Australia (Melbourne and most other Australian Airports are privately held) is probably the jewel in the crown, as is Qantas. Place your bets on someone making an offer for that flying kangaroo in the near future. There are plenty who might like to pick up that well run asset, currently losing billions.

Board says ‘NO’

The offer is unsolicited, and the board has effectively said ‘piss off’ to the group of infrastructure investors, advising against taking up the offer. Still, a takeover offer always affects the share price, and today, the airports shares soared by 32% during the mornings trading. The shares closed at AU$5.81 on Friday but were trading close to AU$9 early today (Monday)

It should be noted, that the takeover price is under the price the shares traded at pre-pandemic.

Distressed

The airport, prior to the pandemic earned most of its money because of international travellers. The Airport suffered an AU$145.6 million dollar loss in 2020 and did not plan on paying any dividend. Some of the takeover group already own substantial Australian airport assets. IFM has interests in Adelaide, Brisbane, Melbourne and Perth airports, as well as airports in the Northern Territory

The offer is conditional. Amongst those conditions is that UniSuper retain its 15% stake in the airport, and that the board unanimously recommends this proposed scheme of arrangement, as well as the usual due diligence and approvals by regulators.

2PAXfly Takeout

This is another timely reminder to wear your seatbelt when seated. Holding you close to your seat will protect you from the sort of injuries sustained on this flight, when unsecured passengers flew to the ceiling of the aircraft, and then came crashing down once the ‘drop’ ceased.

The hope will be that this is an anomaly – a ‘freak accident’ in casual parlance. If it is a systemic error either mechanical or electronic, then this is a larger concern for the airlines that fly Boeing Dreamliner 787 aircraft. Let’s hope it isn’t. If it is, it will pile on the woes to Boeing’s existing stack.

Woo-Hoo! I have an indirect interest in the airport, only acquired last week. The current spike in price of the shares due to this takeover proposal, will probably not last, but hey, on paper, I just made a 30% profit!

Seriously – and more objectively, this is a smart, if ultimately unsuccessful move by the acquiring funds. I have no expertise in dealings at this level, but presumably, the investors are positioning themselves for a future offer and potential takeover.