Insights

Sydney Airport (ASX:SYD) offer shows infrastructure interest: expert

Here’s an expert’s take on the merger and acquisition action that saw Sydney Airport’s share price skyrocket…
The post Sydney Airport (ASX:SYD) offer shows infrastructure interest: expert appeared first on The Motley Fool Australia. –

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has been relatively uneventful for the past month. This stagnation in the airport operator’s shares follows the rejection of its $8.25 per share offer from a consortium of private equity investors.

At market close on Friday, shares in ASX-listed Sydney Airport were fetching $7.64 apiece. This represents a 7.4% discount on the rejected bid.

Management rejected the offer on the basis it undervalued the company. Which may not be too far from the truth if the feeding frenzy for infrastructure assets continues. One respected Australian fund manager shared their view on the current M&A environment.

Milestone moments

It has been the story of recent months… companies, particularly private equity firms, have been flushed with cash after tightening the belt in 2020. As a result, the piggy bank has become weighty, and firms are eager to take a hammer to it.

At the same time, investors are on the hunt for returns. In combination, the market is bearing down on one of the hottest M&A periods in recent history. The proposed acquisition of Afterpay Ltd (ASX: APT) by US-listed payments company Square is a fair indication the action is yet to be on the decline.

Portfolio Manager and Head of Research at Airlie Funds Emma Fisher recently discussed the M&A phenomenon.

What’s really interesting about the flavour of M&A that we are saying right now is the fact if you look at some of the big deals… the Sydney Airport takeover bid recently, Spark Infrastructure, Telstra selling their infrastructure towers, and even the IPO of PEXA… the common thematic there is these are all long-duration infrastructure style investments that are essentially being bid for in mid-20s EBITDA [Earnings before interest, tax, depreciation, and amortisation] multiples.

Fisher added to this commentary,

And this is all happening at a time when the debate in the public markets is really around inflation. The public market’s narrative is I’ll stay away from long-duration assets… over the course of the year bond yields have actually been rising.

So there’s clearly this bifurcation between public markets that are very worried about inflation and the implication for long-duration assets, and private players who are sitting on mounds of cash, and are very happy to deploy that – often at very high multiples to access unique long-duration assets.

What’s next for Sydney Airport on the ASX?

While management is adamant the takeover bid undervalued the company’s share price, future offers can’t be ruled out. In the meantime, investors can expect to see the Sydney Airport ASX release of its 2021 half-year results on Friday 20 August (ASX Reporting Season Calendar).

Finally, based on Friday’s closing Sydney Airport share price, the company commands a market capitalisation of $20.7 billion.

The post Sydney Airport (ASX:SYD) offer shows infrastructure interest: expert appeared first on The Motley Fool Australia.

Should you invest $1,000 in Sydney Airport right now?

Before you consider Sydney Airport, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Sydney Airport wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

If you invested $2,000 in Sydney Airport (ASX:SYD) shares 10 years ago, here’s what it would now be worth
Why the Sydney Airport (ASX:SYD) share price will be one to watch
What’s being overlooked in the Sydney Airport (ASX:SYD) share price?
Why the Sydney Airport (ASX:SYD) share price is up 34% in a month
ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high

Motley Fool contributor Mitchell Lawler owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!