SYDNEY AIRPORT: Board Rejects takeover offer

As we reported yesterday the board of Sydney Airport met yesterday and rejected the AU$8.25 per share offer from IFM Investors. The offer is about half a dollar over the current share price, and just under a dollar down on the pre-pandemic price – prior to an AU$2 Billion capital raising to shore up its balance sheet. According to the AFR that gives the Airport an adjusted share price of AU$7.76 (pre-pandemic).

The rejection of the AU$22 billion takeover proposal was not a surprise and was positioned on the grounds that it was not in the best interests of shareholders.

‘Sydney Airport is strongly positioned to deliver growth as vaccination rates increase and we move into the post-pandemic recovery period.

‘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.’AFRAFR

Even if the Sydney Airport gave approval, the potential new owners might run offside with the regulator, who would be concerned that elements of the same entity owned the three east-coast capital city airports, when they are limited to a maximum of 15% of up to 2.

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.

Not really anything to see here. This rejection was expected. More interesting will be to see what happens next. What offer will make the board consider a takeover?