Sydney Airport accepts record breaking $23.6 billion takeover

Sydney Australia May 19, 2014 passenger aircraft Boeing 747-400 in Qantas colour scheme getting towed to the Qantas Maintenance hangar at Sydney Kingsford Smith airport with the city Skyline in the background, also visible some cargo Commercial Airplanes

Sydney airport has accepted the largest all-cash deal in Australian corporate history, a $23.6 billion takeover offer to a consortium, meaning the airport’s departure from the ASX.

The consortium is led by New York-based Global Infrastructure Partners and the super-fund backed IFM Investors and purchased the airport for $8.75 per share in cash.

The takeover was met with a protest from retail investors at Thursday’s meeting to decide on the deal, with almost 21 per cent of shareholders voting against the takeover.

79 per cent voted in favour of the takeover, passing the required 50 per cent threshold, and 96 per cent voted in support of the sale, passing the 75 per cent threshold.

Retail shareholders raised concerns at the online meeting that they would have to pay large capital gains tax when forced to sell their shares at the pandemic-reduced price, while UniSuper, Sydney Airport’s largest investor, would keep its money by joining the consortium.

“The fact that UniSuper is privileged to maintain its 15 per cent holding… should tell the average shareholder something,” investor Giles Edwards said at the online meeting.

“COVID has knocked many share values downwards and many of those companies, even now, are in the process of recovery. Why would any reasonable shareholder want to sell out of such a good, sound long-term investment?”

Sydney Airport chairman, David Gonski, said that selling now avoided further risks surrounding COVID-19, future competition with Western Sydney Airport, and how Australia’s declining relationship with China would impact its business.

“It is definitely not, in our view, a situation where an opportunity is being taken,” he said, adding his doubts about the longevity of aviation’s COVID-19 recovery.

“One thinks just before the summer break in 2021 that things were coming good and look what happened.”

The new ownership of Sydney Airport includes a 37 per cent stake by Global Infrastructure Partners, followed by 32.9 per cent held by IFM, a 15 per cent holding by UniSuper, and AustralianSuper and QSuper both holding 7.5 per cent each.

IFM chief executive David Neal, speaking on behalf of the consortium, said it welcomed the outcome of the vote.

“Upon completion of the transaction, Sydney Airport will continue to be majority Australian owned, with millions of working Australians to be invested in Sydney Airport through their superannuation,” said Neal.

The takeover comes after the ACCC announced that it will not oppose the acquisition in December last year, as it would not disrupt competition in a market that has such little competition.

The ACCC reported that they accept there is small potential for competition between airports in relation to some aeronautical services, although any lessening of competition from the proposed acquisition would not be substantial.

Featured image: iStock/Boeing746

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accc asx AustralianSuper consortium David Gonski David Neal Giles Edwards Global Infrastructure Partners IFM QSuper sydney airport UniSuper western sydney airport