Even $16.6b can’t buy an airport during the pandemic

Despite being floored by the pandemic and starved of overseas passengers, Sydney Airport this month drew a A$22.3b ($16.6b) takeover offer, a record for Australia and 42% higher than its market value at the time. It sounded too good to refuse, but with Covid muddying the waters, the airport on Thursday rejected the bid. The crisis has spat out an array of beaten-up assets from airlines and airports to casinos and other tourism-dependent businesses for investors betting on a rebound. For boards assessing these takeover approaches however, uncertainty surrounding the strength of any recovery and longer-term prospects is making it harder to distinguish between attractive offers and ones that fall short. ​Sydney Airport said the A$8.25-a-share offer from pension funds including IFM Investors was lower than the stock price before the pandemic and undervalued a “strategic and irreplaceable” asset. The airport’s shares were down 0.9% at A$7.73 at 1:43 p.m. local time. “Sydney Airport is strongly positioned to deliver growth as vaccination rates increase and we move into the post-pandemic recovery period,” it said. The airport said it would only progress a deal that recognized “appropriate long-term value.” In response, the bidding consortium said it was “surprised and disappointed.” It said any comparison with Sydney Airport’s share price before Covid-19 “is of limited relevance” given changes to the aviation market and the “challenging outlook.”<br/>