Here’s why 2021 was a stellar year for the Sydney Airport (ASX:SYD) share price

Key points

• The Sydney Airport share price gained 35% over the course of 2021
• Its major catalyst was a takeover offer posed in July
• The airport’s stock was also likely impacted by COVID-induced travel restrictions and border closures

The Sydney Airport (ASX: SYD) share price took off in 2021, with much of its 35.4% gain spurred by a mid-year takeover offer.

That was a far more impressive performance than that of the broader market. The S&P/ASX 200 Index (ASX: XJO) gained 13% last year.

After closing 2020 trading at $6.41, the airport’s stock was swapping hands for $8.68 at the end of 2021.

In between, it hit a high of $8.71 and a low of $5.48.

Let’s take a closer look at what caused the Sydney Airport share price to jet higher last year.

What sent the Sydney Airport share price soaring in 2021?

Lockdowns, restrictions, and takeovers, oh my! 2021 was a whirlwind for owners of Sydney Airport shares.

Full year results

The first big news from Sydney Airport in 2021 was its results for 2020, released in February 2021.

Over the 12-month period, the airport saw a $107.5 million after tax loss. Its earnings before interest, tax, depreciation, and amortisation (EBITDA) also fell 45% compared to that of 2019, dropping to $627.8 million.

Additionally, it declined to pay a dividend.

However, the market seemed to have expected a worse performance. The Sydney Airport share price gained 2.5% the day its earnings dropped.

Border restrictions kept many travellers grounded

After suffering through 2020, Sydney Airport shareholders might have hoped last year would bring the reopening of Australia’s borders and return to normality.

That hopefulness might have been bolstered by the announcement of the Trans-Tasman Bubble in April. However, it was likely shaken in May when the federal government stated international travel wouldn’t be ‘normal’ until mid-2022.

Of course, as the year went on, COVID-19’s Delta strain wreaked havoc, with much of Australia being plunged into lockdowns until October.

Finally, in November, Australia’s international borders reopened and the travel sector seemed to be getting back to normal.

Except that, by then, the Sydney Airport had been handed a $23.6 billion takeover offer.

A takeover offer sent the Sydney Airport share price rocketing

On 5 July, the Sydney Airport share price took off to multi-year heights. It soared 33.9% after the airport was handed an $8.25 cents per share takeover offer.

The bid came from a consortium of infrastructure investors and superfunds, later named the Sydney Aviation Alliance.

10 days later, the airport rejected the offer, stating it didn’t properly value the asset.

That began a to-and-fro. The consortium put forward a bid of $8.45 that Sydney Airport quickly rejected.

Eventually, in September, it offered $8.75 per share, which was accepted by the airport’s board.

Shareholders will get the chance to vote on the acquisition on 3 February.

The post Here’s why 2021 was a stellar year for the Sydney Airport (ASX:SYD) share price appeared first on The Motley Fool Australia.

More reading

• Exactly who will own Sydney Airport (ASX:SYD) following its takeover and why does it matter?
• Why is the Sydney Airport (ASX:SYD) share price worth keeping an eye on?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• 5 best ASX 200 travel shares of 2021
• 2 ASX travel shares that flew higher than Flight Centre (ASX:FLT) in 2021

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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