Sydney Airport dismisses $17 billion consortium bid but is open to talks

The board of Sydney Airport on Monday rejected an upgraded A$22.8 billion ($16.8 billion) bid by a consortium of money managers and superannuation funds to acquire 100% interest in the country's largest airport, but left the door open for further discussions.

It was the second time in just over a month that Sydney Airport rejected offers from the consortium, saying they didn't reflect the airport's long-term value. The consortium was composed in July of two funds managed by Sydney-based IFM Investors, New York-base Global Infrastructure Partners and A$93 billion Brisbane-based super fund QSuper, with A$225 billion, Melbourne-based AustralianSuper joining for the August bid.

The latest offer of A$8.45 per "stapled security," or share, of the Australian stock exchange-listed company, up from July's initial offer of A$8.25, brought the consortium's bid closer to the A$8.60 to A$9.05 range the company's shares were trading in at the start of 2020, before the coronavirus pandemic began shutting down both international and domestic travel .

The price of the company's stapled securities plunged to A$4.87 on March 23, the day global stock markets bottomed, and were still changing hands at only A$5.81 when the consortium announced its first bid on July 2, propelling them to a close of A$7.78 by the end of the following session.

That has left the consortium and the company engaging in a public relations duel over whether the global pandemic's hit to Sydney Airport's business model will prove fleeting or longer lasting.

A Sydney Airport news release Monday accentuated the positive, noting "the rapid increase and acceleration in Australian vaccination rates in recent weeks and the government's plans to progressively ease restrictions," setting the stage for the reopening of travel. It dismissed the consortium's bid as "opportunistic."

For its part, the Sydney Aviation Alliance expressed disappointment with the company's unwillingness to engage with the consortium "at a time when Sydney Airport is facing short, medium and long term challenges," including the anticipated opening of a competing airport in western Sydney in 2026 and "expected long term changes in business an consumer travel preferences," the consortium said in its own release.

Still, the Sydney Airport news release said the company's board is "open to engaging with the Sydney Aviation Alliance should the consortium be prepared to lift its indicative price to appropriately recognize long term value for Sydney Airport security holders."

The alliance's news release contended that Sydney Airport's lack of engagement and immediate rejection of its revised proposal suggests it's "unlikely that the parties can agree a path forward and, as such, there is no assurance the revised proposal will proceed."

In Monday trading, the company's stapled securities slipped to A$7.70 from A$7.75 the previous session, suggesting investors still see room for the two sides to pursue a deal.