Sydney Airport (ASX:SYD) board recommends revised takeover proposal. What could this mean for shareholders?

The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price has accelerated by over 40% since the company received its initial takeover offer.

The company’s shares were hovering around the $5.80 mark following a turbulent 12 months for Sydney Airport. However, its shares roared to a 52-week high of $8.41 last Monday before ending the week at $8.30 apiece.

Recap on the takeover offer

In early July, Sydney Airport advised that a consortium of infrastructure investors proposed a $22.6 billion all-cash transaction to buy Australia’s largest airport.

The deal offered $8.25 per share, which represented a 42% premium on the company’s shares at the time.

However, the Sydney Airport board knocked back the proposal just two weeks after. It stated that the offer undervalues the company and is not in the best interest of shareholders.

A revised conditional and non-binding proposal soon followed a month later (16 August), sweetening the deal. The consortium of infrastructure investors tabled an improved $8.45 per share offer. Yet again, the board declined, noting that the current COVID-19 environment does not reflect Sydney Airport’s long-term value.

Another offer arrived last Monday, upping the ante to $8.75 per share to acquire 100% of Sydney Airport shares. As such, the board appeared satisfied and said that it intends to grant the consortium due diligence on a non-exclusive basis.

This allows the buyer to put forward a binding proposal. The due diligence will take around 4 weeks to complete.

What does this mean for shareholders?

The process will proceed to the next step once the binding proposal is received and due diligence is complete.

The Sydney Airport board would make a unanimous recommendation to shareholders voting on the transaction. If this is approved, Sydney Airport and the consortium will enter into a mutually acceptable scheme implementation deed. Although, this would be subject to several conditions, including court and regulatory approvals.

For now, Sydney Airport shareholders will need to wait until due diligence is complete around mid-October.

Based on the current Sydney Airport share price, the latest offer represents an upswing of 5.4%.

Sydney Airport share price snapshot

Over the past 12 months, Sydney Airport shares were mostly tracking sideways until the takeover proposal announcement. Since then, the company’s shares have skyrocketed to near pre-COVID highs.

Sydney Airport presides a market capitalisation of roughly $22.4 billion and has approximately 2.7 billion shares on its books.

The post Sydney Airport (ASX:SYD) board recommends revised takeover proposal. What could this mean for shareholders? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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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