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Why has the Sydney Airport share price lifted?


The market value of Australia’s biggest airport operator is up 38% over the last 6 months, continuing its impressive run in the morning's trading.

Shares in the operator of Australia’s biggest airport are flying high in early trade.

At the time of writing, Sydney Airport (ASX: SYD) shares were up nearly 3% at $8.59 after hitting a fresh 52-week high of $8.60.

What is lifting the Sydney Airport stock price?

The latest gains come after Australia’s competition regulator on Thursday gave a green light to the proposed $23.6 billion takeover of Sydney Airport.

It is one of the country’s biggest takeover deals.

In a separate statement, Sydney Airport said the deal had also received approval from the European Commission and is now awaiting a go-ahead from Australia's Foreign Investment Review Board.

The operator last month agreed to the buyout proposal from a consortium of funds including IFM Investors, QSuper, AustralianSuper and US-based Global Infrastructure Partners, which had pursued the deal for months.

The Sydney Aviation Alliance consortium was forced to improve its offer price twice before it was able to persuade the airport operator to open up its books.

Sydney Airport shareholders will receive $8.75 per share.

Sydney Airport has scheduled a shareholder vote on the acquisition for early February, with the takeover requiring at least 75% of all votes in its favour to proceed.

Little competition

The Australian Competition and Consumer Commission (ACCC) found the sale of Australia’s biggest airport was unlikely to substantially lessen competition in a market that already has such little pressure.

“Throughout our investigation, we heard that there is very little, if any, competition between Australian airports,” ACCC chair Rod Sims said in a statement.

“This is no surprise, as we’ve been saying for a long time that Australian airports such as Sydney Airport are natural monopolies, with significant market power and no price regulation.”

Of the consortium, IFM already owns a 20% stake in Brisbane Airport and 25% in Melbourne Airport, while QSuper also holds a stake in Brisbane Airport.

AustralianSuper holds a 5% direct stake in Perth Airport in addition to an indirect stake of 4.75% through an investment with Hastings Funds Management.

Australian law also requires that at least 51% of assets such as airports be held within the country.

Before the initial proposal in July, Sydney Airport shares had slumped 30% since their pre-pandemic level in March 2020. The stock is now up 38% over the last 6 months.

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