The Sydney Airport Holdings Pty Ltd (ASX: SYD) share price probably won't bounce back to its pre-COVID levels until Australia's borders are re-opened, a senior analyst at Morgans has told media.
The call follows Sydney Airport's rejection of an $8.25 per share 100% takeover offer put to it by a consortium of infrastructure and super investors.
Currently, the Sydney Airport share price is $7.94, having gained 0.38% today.
The Sydney Airport said the consortium's offer undervalued it and took advantage of the challenges brought about by COVID-19.
However, Mogans' senior analyst Nathan Lead told the Australian Financial Review the airport's share price likely won't reach the offered figure until international travel is back on the cards.
Brokers predict Sydney Airport will sell for higher offer
Sydney Airport acknowledged the likelihood its share price won't reach $8.25 soon when it rejected the bid. It said:
[T]he security price is likely to trade below the consortium proposal's indicative price in the short term, however Sydney Airport will only progress a change in control transaction on terms that deliver and recognise appropriate long term value for Sydney Airport securityholders.
The Sydney Airport share price's highest close of 2020 was $8.18, which it hit in January. It then fell 33% over February and March. That was just 16 cents less than the airport's share price's all-time highest close of $8.97. It set the record in November 2019.
Lead also stated that, when one takes into account the $2 billion capital raise conducted by Sydney Airport last year, $8.25 is near the airport's pre-COVID trading price.
He was quoted as saying that rejecting the consortium's offer was "brave" of the airport.
However, Credit Suisse analyst Paul Butler told the publication that the consortium likely didn't post its best bet. Butler expects to see a higher offer given to the airport shortly.
Citigroup analyst Suraj Nebhani agrees with Butler. Nebhani expects the airport will be taken over at a higher price.
Sydney Airport share price snapshot
After gaining 33% on the back of the consortium's takeover offer, Sydney Airport shares are back in the green.
Right now, they're 23% higher than they were at the start of the year. They have also gained 50% since this time last year.
The airport has a market capitalisation of around $21.3 billion, with approximately 2.7 billion shares outstanding.
