Sydney Airport fails to upgrade buyout defence

People attend an event celebrating Qantas' 100th birthday, including a "joy flight" over Sydney, at Sydney Airport in Sydney, Australia, November 16, 2020.

MELBOURNE, Aug 20 (Reuters Breakingviews) - Sydney Airport’s (SYD.AX) buyout defence is struggling to take off. In its first results since rejecting a A$22.8 billion ($16.3 billion) takeover bid led by IFM Investors, the company provided little evidence of how it might deliver the same kind of value. The figures were predictably weak, with first-half EBITDA sliding 30% from a year earlier. It also touted a new luxury shopping enclave fronted by LVMH’s (LVMH.PA) Louis Vuitton and pointed to potential property development to capitalise on the e-commerce boom.

International travel, though, will be slow to recover Down Under. Even when it does, there’s no guarantee Chinese visitors will return to help fill upscale shops. The real estate projects are years away. Meantime, a sweetened A$8.45-a-share proposal is available now. That’s 47% above the undisturbed price, and worth more if Sydney Airport’s equity hike last year is factored into the equation. Holding out for another sweetener might pay off, but there’s a growing risk the suitors take off instead. (By Jeffrey Goldfarb)

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