The Sydney Airport (ASX: SYD) share price is rising on positive news in relation to the planned takeover.
ACCC approves Sydney Airport deal
The Australian Competition & Consumer Commission (ACCC) has decided it will not oppose the takeover of Sydney Airport by a consortium of investment funds.
Each of those investment funds have stakes in a range of infrastructure assets, including holdings in other Australian airports.
There is very little, if any, competition between Australian airports. The ACCC has long said that airports have natural monopolies with significant market power and there is no price regulation.
Therefore, the ACCC concluded that the takeover would be unlikely to substantially lessen competition in a market that already has such little competition.
However, some stakeholders were worried that there could be more information flow between airports with common ownership, which could give airports more bargaining power against airlines and other users of airports. But, the ACCC said its decision was based on the lack of competition means that competition wouldn’t be significantly lessened.
The ACCC also said that the current monitoring regime is not effective about constraining Sydney Airport from charging excessive prices. It will keep advocating for a regulatory regime that is effective.
Deal progresses
Sydney Airport noted in its own announcement that the European Commission has also approved the proposed acquisition. The EU and ACCC conditions have now been satisfied.
There are still other conditions to go with FIRB approval, Sydney Airport investor approvals and court approval to pass.
A booklet with further information about the takeover is expected to be issued to investors later this month with the shareholder meeting anticipated to be held in early February 2022.
The Sydney Airport board has unanimously recommended that investors vote in favour of the scheme at the meeting assuming there is no better offer and that an independent expert concludes the deal is in the best interests of investors.
Summary thoughts on the Sydney Airport share price
It seems that Sydney Airport has passed the hardest hurdle to get the deal through with the ACCC. I think it’s a good deal for investors, but it’ll be a shame to lose Sydney Airport from the board. It’s hard to find quality infrastructure stocks on the ASX.
