The consortium—which also includes QSuper Board and Global Infrastructure Management LLC—had on July 5 offered to buy Australia’s largest airport operator at A$8.25 a share. The offer was at a 42% premium from the stock’s closing price on July 2.
“The Sydney Airport boards have carefully considered the indicative proposal, including obtaining advice from their financial and legal advisers,” Sydney Airport said in a statement. “The boards have unanimously concluded that the indicative proposal undervalues Sydney Airport and is not in the best interests of shareholders.”
The offer comes as the global aviation industry reels from the lingering impact of the Covid-19 pandemic that has restricted international travel as governments around the world struggle to curb rising virus infections.
The timing of the offer is opportunistic given the significant impact of Covid-19 on Sydney Airport’s performance, the company said. Sydney Airport reported that total passenger traffic fell 59% in May compared to the same period in 2019.
“Sydney Airport is strongly positioned to deliver growth as vaccination rates increase and we move into the post pandemic recovery period,” the company said. “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.”
Sydney Airport said it delivered annualized total shareholder return of 19% from 2015 through 2019, with passenger traffic rising 2.9% on a compounded annual growth rate basis over the same period.
Beyond the core aviation business, the airport is supported by high yield retail properties and ground transport services, the company said. The airport’s land assets could be developed into additional commercial properties, it added.