A recent rally in the Sydney Airport share price on the back of positive sentiment about borders reopening has some suspecting that the IFM-led consortium may be sitting on the sidelines for now.
Following the Qantas results announcement on August 26, in which chief executive Alan Joyce said international travel would start by Christmas, Sydney Airport shares have increased from about $7.76 to $7.93, with its market value now about $21bn.
The consortium bidding for the airport, which includes IFM, QSuper, GIP and AustralianSuper, initially offered $8.25 per share before revising its offer to $8.45 in recent months, in the wake of state lockdowns to curb the spread of the Covid Delta strain.
Both proposals were rejected.
The thinking now is that with the rallying share price, the group may have to lift its offer to an even higher price to gain board acceptance.
One would say that $9 per share now would be line ball when it comes to gaining the board’s backing, whereas before perhaps $8.75 would have been enough to satisfy directors.
The increasingly positive sentiment around air travel has been reflected in the past two weeks by the Qantas share price, which has risen from about $4.25 in the days before it reported its results to $5.30.
Most believe that the consortium, known as the Sydney Aviation Alliance, has enough firepower to lift its offer, but the question is whether it is now waiting for the shares to fall on any potentially disappointing news relating to border reopenings linked to the pandemic.
It would have no doubt been gauging investors in recent days on the back of the share price movements, including 15 per cent shareholder UniSuper which has agreed to roll into the offer should it be accepted.
While the country plans to open up to international travel once 80 per cent of the population is fully vaccinated, the unknown is how the nation’s hospital system will cope should it become inundated with Covid cases after the lifting of lockdown restrictions.
Another interesting facet is whether IFM and AustralianSuper will continue to pursue the $8bn-plus stake in Sydney’s WestConnex toll road project should it get the backing to buy Sydney Airport.
Final bids for WestConnex are due on September 9. IFM is bidding against a Transurban-led consortium that includes AustralianSuper and the Abu Dhabi Investment Authority and is the favourite to win.
A 49 per cent interest has been up for sale by the NSW state government through investment banks Citi and RBC.
Last week, AustralianSuper chief investment officer Mark Delaney said that the airport bid had some way to play out.
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