/ 09 November 2021

Sydney Airport deal up and away


After 5 months of negotiating, a consortium of superannuation-related giants has won support from the board of Sydney Airport to take it off their hands. The price: $23.6 billion, which equates to $8.75 a share – up from July’s offer of $8.25. If it goes through, it will be the 3rd biggest deal in Australian corporate history following Afterpay’s stonking $39 billion acquisition by Square this year and Westfield’s sale in 2017 for $27.6 billion. Sydney Airport’s chairman David Gonski recommended shareholders approve the offer because it represents “appropriate long term value for the airport”.

Two reasons. Who owns Australia’s critical infrastructure is good to know. As Oz’s busiest domestic and international airport, those who run it say 300,000 jobs are directly and indirectly reliant on its operations – pre-pandemic, of course. And second: you might become a shareholder if the deal goes through. Well, kinda… The group behind the bid is Sydney Aviation Alliance, and it’s made up of Australian funds IFM Investors, QSuper and AustralianSuper, and US-based Global Infrastructure Partners. The Aussie side manages the superannuation funds of millions of Aussies. Maybe you’ll get a discount on your parking if you’re a member? Actually, don’t be ridiculous, they’d never give away that much money…

There are oh so many regulatory hoops for Sydney Aviation Alliance to jump through… Under the Airports Act, no single investor can own more than 15% of Sydney Airport + Perth, Brissie, or Melbourne. Members of the consortium already have investments in the Aussie airport biz, so that has to be sorted out. The ACCC – Oz’s competition regulator – is looking it over and will deliver a report next month. The deal must also get clearance from the Foreign Investment Review Board. And then there are shareholders of Sydney Airports to ask… They get a vote on the deal at a meeting on 24 January. Other lightning strikes that might force an emergency landing: some current investors will need to be convinced that the offer is a good one given the pandemic’s hit on international travel and its effect on the airport’s price. And the airlines aren’t happy saying charges could increase if ownership becomes more concentrated. We might need to brace for turbulence…

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