The arrival area of international airport can be seen after Australia implemented an entry ban on non-citizens and non-residents due to the coronavirus disease in Sydney.
On Monday, Sydney Airport Holdings Pty Ltd rejected an improved bid from a group of infrastructure investors valued A $22.80 billion as undervaluing the airport operator but said it was open to a higher offer.
The current offer valued Sydney Airport at A $8.45 per share, 2.4% higher than the new offer of A $8.25 a share and a more than 9% premium on the stock's Friday close.
Upon takeover would be among the largest buyouts of an Australian firm and underline a year of stellar deal activity, which has already seen a mega $29 billion buyout of Afterpay by Square.
The unanimous board rejection comes a month after the airport operator turned down an initial bid from the Sydney Aviation AllianceSydney Aviation Alliance, a consortium of U.S. investors IFM Investors and QSuper to IFM Investors and the Sydney Aviation AllianceSydney Aviation Alliance - Global Infrastructure Partners.
Record interest rates have driven pension funds and their investment managers to chase higher yields.
The largest pension fund, AustralianSuper, has joined the consortium, Sydney Airport said in a move that may make it tougher for a rival offer to emerge given the requirement for 51% Australian control of the airport.
UniSuper, Sydney Airport's biggest shareholder with a 15.3% stake, has indicated it is open to rolling that equity into an investment in the privatised company, as required as part of the bid conditions.
Sydney Airport said its board was open to engaging with the Sydney Aviation AllianceSydney Aviation Alliance if the consortium lifts its long term price to appropriately recognise securityholder value.
Sydney Airport is Australia's only listed airport operator and a purchase would be a long-term bet on the travel sector which has been battered by the pandemic.
Australia's international border remains closed and Sydney is in its eighth week of lockdown after an outbreak of the Delta variant of COVID - 19.
However, analysts and investors believe there is scope for a higher price given the strong long-term outlook for an airport operator.
Jefferies analyst Anthony Moulder said on July 15 that a price closer to A $9 a share would be the more appropriate premium for the airport operator.
Sydney Airport is due to report its first-half financial results on Friday.