The consortium looking to acquire Sydney Airport could be in for a fight against watchdogs.
The post Sydney Airport (ASX:SYD) share price shrugs off possible takeover hurdles appeared first on The Motley Fool Australia. –
Numerous bodies will be closely dissecting the Sydney Aviation Alliance’s proposed acquisition. Particularly as one of the alliance’s leaders already owns significant stakes in both Melbourne Airport and Brisbane Airport.
Under the Airports Act, there is a 15% limit on cross-ownership between Sydney Airport and Melbourne, Brisbane, and Perth’s airports.
At the time of writing, the Sydney Airport share price is $8.43, 0.3% higher than its previous close. It’s also 3.7% lower than the consortium’s $8.75 per share takeover bid.
Let’s take a closer look at what has Sydney Airport in the headlines today.
Sydney Airport takeover skirmish
The Sydney Airport share price could be in for a rollercoaster as the Australian Competition and Consumer Commission (ACCC) looks over the airport’s proposed takeover.
The Sydney Aviation Alliance – led by pension fund-owned IFM Investors and made up of numerous other super funds – will need to gain merger clearance from the European Union prior to its planned takeover.
But, potentially more worrying, the ACCC and the Australian Foreign Investment Review Board will also get a say as to whether it will go ahead.
The ACCC has already begun a review into the takeover. It’s particularly interested in the effect it might have on competition among airlines.
The watchdog recently put the spotlight on competition at Sydney Airport. It warned it and other airports not to increase prices charged to airlines. The ACCC said that doing so would be “systematically taking advantage of their market power”.
However, it might be that pesky 15% cross-ownership rule that really puts the brakes on the takeover.
An ACCC market inquiry gave a vague breakdown of how ownership of the consortium is expected to be split post-acquisition.
IFM already owns a 25% stake in Melbourne Airport and 20% of Brisbane Airport. If all bodies approve the takeover, IFM will also indirectly own at least 15% of Sydney Airport.
The watchdog has outlined that 2 IFM-controlled entities will each own between 7.5% and 18% of the consortium. According to reporting by The Age, IFM hopes that by splitting its ownership between 2 of its entities, it might skirt the Airport Act’s cross-ownership rules.
AustralianSuper, QSuper, and UniSuper will also hold between 7.5% and 18% each. Global Infrastructure Partners is set to control more than 20% of the consortium.
If IFM’s strategy isn’t successful, it could be disastrous for Sydney Airport’s takeover.
Sydney Airport share price snapshot
The Sydney Airport share price has gained 2.4% since Friday’s close. Friday was its final session before the airport’s board approved the takeover.
Right now, it’s also 31% higher than it was at the start of 2021.
The post Sydney Airport (ASX:SYD) share price shrugs off possible takeover hurdles appeared first on The Motley Fool Australia.
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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.