Consortium with overseas investors gets FIRB approval for $23.6bn Sydney Airport takeover

The FIRB has given the green light for the $23.6bn takeover of Sydney Airport, with shareholders set to vote in February on one of the biggest deals of the year.

The $23.6bn takeover of Sydney Airport has been given the green light by the Foreign Investment Review Board. Picture: NCA NewsWire/Flavio Brancaleone

The $23.6bn takeover of Sydney Airport has been given the green light by the Foreign Investment Review Board, taking the suitors, a consortium of Australia and global investment funds, one step closer to finalising their blockbuster deal.

Only two weeks ago the Australian Competition and Consumer Commission said it had no objections to the takeover of Sydney Airport by the Sydney Aviation Alliance consortium, as regulatory authorities look to wave through one of the biggest deals of the year.

In a statement to the Australian Securities Exchange on Wednesday, Sydney Airport said the receipt of this ‘no objection letter’ from FIRB satisfied the condition precedent in a clause of the scheme implementation deed (SID) between Sydney Airport and SAA.

“The effect of this is that all Regulatory Conditions under the SID, being the FIRB, ACCC and European Union merger control conditions, are now satisfied,” Sydney Airport said.

But there are still a number of hurdles to clear, which are mainly now in the hands of shareholders.

The consortium seeking to take over Sydney Airport is made up of IFM Investors, QSuper, AustralianSuper and Global Infrastructure Partners.

The Sydney Airport board continues to unanimously recommend that Sydney Airport securityholders vote in favour of the takeover at the schemes meeting on February 3 in the absence of a superior proposal, the company said.

“The implementation of the schemes remains subject to a number of conditions, including approval of Sydney Airport securityholders at the scheme meetings, court approval, and the satisfaction or waiver (where capable of waiver) of certain other customary conditions as outlined in the scheme booklet and in the SID.”

The takeover price is set at $8.75 per share and followed two previous proposals, offering $8.25 and $8.45 a share, which were rejected by the board as “opportunistic” and not reflecting the long-term value of Australia’s largest gateway.

The scheme booklet released late last week raised the standard risks around the future performance of Sydney Airport, including new strains of Covid-19 such as Omicron, which could disrupt its operations.

“Covid-19 highlights that future pandemics, or further variants of Covid-19 such as Omicron, may have material and more extended impacts on airport operations, particularly where international and state borders are closed for extended periods of time,” the scheme booklet said.

This concern over the emergence of Omicron was backed up by the independent experts’ report within the scheme booklet.

“Although the environment is improving with the rollout of Covid-19 vaccines, we remain some distance from achieving pre-Covid-19 passenger levels and October 2021 total passenger traffic was down 98.4 per cent on the corresponding period in 2019. Additionally, as evidenced by Europe’s fourth wave of the Covid-19 pandemic and the emergence of the Omicron variant in November 2021, outcomes are extremely fluid.”

The Sydney Airport operator had after months of dwindling figures, recently reported a doubling of international travellers in November compared to the same month last year, while domestic passengers increased by third.

Total passenger traffic was 498,000 in November, down 86.7 per cent from the same month in 2019. International traveller numbers were most affected, down more than 93 per cent.

But with 407,000 domestic travellers passing through Sydney Airport in November, traffic was significantly higher than October – when only 46,000 did.

Sydney Airport posted a $97m loss for the first half of the 2021 calendar, following a full year loss of $145m in 2020.