The sharemarket reckons the $22 billion offer for Sydney airport from a bunch of superannuation funds won’t fly unless more fuel (cash) is added to the mix.
Sydney Airport said on Monday it has received an unsolicited approach from a group of superannuation funds offering a 40% higher share price on the last share price on Friday of $5.81.
The putative bidders are obviously not that concerned about the impact of Covid on the airport’s current or future business judging by the $8.25 a share offer.
The bidding consortium comprises of IFM Investors, QSuper, and Global Infrastructure Management.
But after the shares surged 38% at one stage on Monday, they retreated a touch to close at $7.78, up 34%. The high for the day was $8.04, well short of the $8.25.
That they didn’t get anywhere near the suggested price tells us investors reckon it is light on and needs more cash – upwards of $8.75 or more.
Monday’s market reaction also tells us that there will not be rival bidders to the suggested deal from the super funds.
Sydney Airport’s boards have commenced an assessment of the proposal and their negative attitude can be gleaned from these comments:
But they said indicative price – while at a premium of more than 40% on Friday’s close – was below where Sydney Airport’s security price traded before the pandemic.
The shares traded bat or above the proposed offer price in February on 2020, as the pandemic was sweeping across the globe and Australia.
“The Indicative Proposal has been made during a global pandemic which has deeply affected the aviation industry and the Sydney Airport security price,” Sydney Airport said on Monday.
“The boards are undertaking detailed analysis of, amongst other things, whether the proposal is reflective of the underlying value of the airport given its long-term remaining concession and the expected short-term impact of the pandemic.
“The Boards will update Securityholders accordingly,” Sydney Airport’s board said in Monday’s statement.
It’s hard to see what the bidders can bring to Sydney Airport that the current management haven’t done during Covid.
The suggested offer has the hallmarks of an opportunistic attempt to get the airport on the cheap while its international business is locked down and the domestic operations are restricted and being hit by repeated lockdowns.
