The sale of Sydney Airport, the largest airport in Australia, has reportedly moved a step closer, as an infrastructure investor group received permission to perform due diligence on Sydney Airport Holdings, the company that runs Kingsford Smith Airport, after improving its acquisition bid to A$23.6 billion ($17.4 billion).
According to Sydney Airport, Sydney Aviation Alliance (SAA), the bidding consortium, has been awarded non-exclusive due diligence, which is scheduled to take four weeks after inking a non-disclosure deal.
According to reports, the proposal boosted the airport's stock by 5%, with experts claiming that a competing offer would be improbable given the size of the funding required and foreign ownership restrictions that require the airport to be 51% Australian owned.
According to an analyst from Credit Suisse, the bank forecasts a high chance of a deal completing given the board's drive to unanimously endorse the (consortium's) offer provided there is no alternative higher offer.
Sydney Airport is Australia's sole publicly traded airport operator, and an acquisition would be a long-term gamble on the travel industry, which has been hit hard by the pandemic. The government intends to progressively open its borders once 80% of adults have had complete vaccinations, which is expected by the end of the year.
A successful acquisition would be one of the largest takeovers of an Australian company and would cap off a year of record transaction activity, which has already seen Square's $29 billion acquisition of Afterpay.
The revised offer of A$8.75 per share, a 3.6% increase, follows previous bids by the consortium, of A$8.45 and A$8.25, both of which were rejected by the airport operator's board as insufficient.
Due to the amount of time the deal would take to complete and the minimal chances for a competing bid, Sydney Airport shares traded at A$8.40 on Monday (13 Sept) morning, below the offer price.