Sydney Airport soars on asset acquisition

Sydney Airport (SYD) has experienced its biggest gains in three and a half years after settling its tax dispute with the Australian Tax Office and fully acquiring the airport asset, enabling the company to simplify its corporate structure.

The company's share price climbed 5% to $3.78 – just shy of its $3.82 record high set in May – as it resumed trade this morning following a non-dilutive placement to partially fund the acquisition, with most of the minority airport owners choosing to swap their stake for the proportionate number of listed Sydney Airport securities.

The placement was issued at Sydney Airport's closing price on Thursday at $3.60 per stapled security and raised $308 million.

Owning 100% of the airport structure enables the company to simplify its structure, facilitating the permitted level of foreign ownership to increase to 49% from 40%. 

To settle the tax issue Sydney Airport is to make a primary tax and interest payment of $69 million, which is less than the potential liability under the original position paper, with the tax office ceasing all audit activity in regards to the redeemable preference shares.

Broker CIMB Securities supported the changes, upgrading its recommendation on the stock to "outperform" and lifting its target price by 34 cents to $3.83.

"We believe that by simplifying its structure and settling the ATO tax dispute, SYD is now a more attractive investment opportunity for potential investors," CIMB said. "Additionally, with foreign ownership at multi-year lows, we see a potentially large base of incremental buyers."