Sydney Airport takeover bid receives backing from proxy advisers

Sydney Airport investors should accept the $23.6 billion takeover bid led by IFM Investors according to multiple proxy advisers and the Australian Shareholders’ Association (ASA).

The Australian Council of Superannuation Investors, Institutional Shareholder Services (ISS) and Ownership Matters were among the firms to recommend that shareholders vote in favour of the proposed takeover according to The Australian Financial Review.

In particular, ISS and Ownership Matters said the offer of $8.75 per share represented certainty of value compared to Sydney Airport’s share price during the pandemic.

At least 75 per cent of investors will need to vote in favour of the proposal at a meeting on 3 February for it to proceed.

The Sydney Aviation Alliance, which includes IFM as well as AustralianSuper, QSuper and Global Infrastructure Partners, submitted its $23.6 billion cash offer in September after an earlier offer of $8.25 per share.

Sydney Airport subsequently entered into a scheme implementation deed in November.

Both the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board have announced their approval of the deal.

ACCC chairman Rod Sims said the proposed acquisition was “unlikely to substantially lessen competition in a market that already has such little competition”.

In its recommendation, the ASA also highlighted certainty as a key reason to vote in favour.

“The certainty of a cash price de-risks the uncertainty around COVID-19 and the changing environment of airports and the increased level of risk attached to these shares,” the ASA said according to the AFR.

However, it said that individual shareholders may also have reasons to vote against the offer.

“The tax implications may not be in your best interests, you may be happy with a longer-term view and believe that this investment fits with your portfolio and investment strategy, or you may believe there is an opportunity for a superior bid at some point,” the ASA noted.

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.