The board says the offer is opportunistic and undervalues the company.
The post Sydney Airport (ASX:SYD) share price on watch after takeover bid rejected appeared first on The Motley Fool Australia. –
The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price will be in focus when trading resumes this morning. That’s because the company has formally rejected the takeover offer for 100% of its shares.
Shares in Australia’s largest airport ended yesterday’s session 0.51% lower at $7.80 after speculation emerged the board would reject the indicative offer.
Let’s take a closer look at today’s news.
Board says no
In a statement to the ASX, Sydney Airport advised it has turned down the offer from a consortium of infrastructure investors to buy 100% of its shares at $8.25 apiece.
The board says the offer “undervalues Sydney Airport and is not in the best interests of Securityholders.”
It gave the following reasons for rejecting the offer:
The “irreplaceable nature” of Sydney Airport.
Sydney Airport is a capitalised asset.
The board believes the offer is “opportunistic” and is taking advantage of the COVID-19 pandemic. The offer is below the Sydney Airport share price pre-pandemic.
The diversity of its revenue sources and “significant value” of the airport’s land assets.
Anticipated stronger growth in a vaccinated, post-COVID world.
In its statement, the board says it “recognise(s)… the security price is likely to trade below the Consortium proposal’s indicative price in the short term…”
The original offer
When the bid by the consortium was submitted, the Sydney Airport share price rocketed almost 40% on the day.
The bid of $8.25 per share represented a premium of 42% to the closing price on the Friday before the submission. The bid included absorbing the $10 billion in debt held by Sydney Airport – making the total bid around $30 billion.
Sydney Airport share price snapshot
Over the past 12 months, the Sydney Airport share price has increased 46.5%.
While this has been driven mostly by the takeover bid, it has not been the only contributing factor. On the last trading day before the offer was sent, the company’s share price was already higher than when compared to one year prior.
Sydney Airport’s market capitalisation is approximately $21 billion.
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
Sydney Airport (ASX:SYD) share price lower as board expected to reject takeover
A2 Milk and Zip were among the most traded ASX shares last week
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.