The Sydney Airport [ASX:SYD] is set to be acquired by Sydney Aviation Alliance for $23.6 billion.
SYD, Australia’s biggest and busiest airport, entered a scheme implementation deed where Sydney Aviation Alliance will acquire 100% of SYD shares.
SYD shareholders will receive $8.75 cash per stapled security.
The airport’s board unanimously recommended shareholders vote in favour of accepting the offer.
Shares in Sydney Airport are currently trading at $8.45 per share, up 2.7%.
SYD takeover bid: the details
Sydney Aviation Alliance, the consortium set to acquire Sydney Airport, comprises investment and infrastructure funds affiliated with IFM Australian Infrastructure Fund, IFM Global Infrastructure Fund, AustralianSuper, QSuper, and Global Infrastructure Partners.
The $23.6 billion bid is a $1.3 billion upgrade to the consortium’s previous offer in July.
The SYD board unanimously recommended that SYD shareholders approve the scheme in the absence of a superior proposal and successful meeting of conditions precedent.
A vote is expected in the first quarter of 2022.
How to Limit Your Risks While Trading Volatile Stocks. Learn more.
Not so fast: regulatory hurdles ahead
A takeover of this size, concerning Australia’s largest airport, will not go unchecked by authorities.
The bid must be approved by heavy hitters: the Australian Competition and Consumer Commission and Australia’s Foreign Investment Review Board.
The consortium seeking to acquire SYD must also obtain a merger clearance from the European Union.
Of course, the proposal must satisfy SYD’s securityholders and get the go-ahead from the Supreme Court of New South Wales.
The regulatory involvement of the ACCC is one to follow.
As the Australian Financial Review reported:
‘The ACCC kicked off its informal review in early October, asking airlines, aircraft owners and other aviation services groups to lob their submissions into the mix by October 28.
‘The review is likely to require IFM to explain why its funds should be allowed to own a substantial stake in a privately-held Sydney Airport, when its Australian infrastructure fund already has stakes in nine Australian airports.
‘IFM’s cross ownership is something the fund manager, its lawyers and consortium partners have grappled with for years. Under Australia’s Airports Act, no one investor can own more than 15 per cent of two major Australian airports (Sydney and Perth, Sydney and Brisbane, or Sydney and Melbourne), in a bid to try to stop airport owners ripping off airlines and/or their passengers.’
IFM already owns a 25% interest in Melbourne Airport and a 20% stake in Brisbane Airport.
So under the airport ownership rules, it cannot own more than 15% of SYD if its other holdings remain.
As the Australian reported last month, sources close to IFM say it will be able to get around the restrictions by owning the airport in conjunction with its consortium partners.
The consortium’s bid comes just after Australia fully vaccinated 80% of those aged 16 and over.
The country is now on track to be one of the world’s most vaccinated countries against COVID-19, raising sentiment for stocks in the travel sector.
But while the pandemic hindered many businesses’ growth, not all were stunted.
In fact, some sectors are flourishing.
A choice seven small-caps in these budding sectors were recently profiled by our guru Murray Dawes in a detailed briefing.
If you want to get your hands on it and have a read, you can do so here.
For Money Morning
PS: Our publication Money Morning is a fantastic place to start on your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here