ACCC signs off on Sydney Airport and Prime takeovers
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The ACCC gave approval to the three proposed takeovers this morning – the most prominent of which was Sydney Airport (ASX:SYD).
Sydney Airport has accepted a takeover offer from the Sydney Aviation Alliance – a consortium of investors comprising of IFM, AustralianSuper and QSuper among other members.
Despite months of due diligence, and two prior offers which were knocked back, the ACCC still had to sign off on the deal.
Australia’s competition watchdog has the power to disallow mergers and other partnerships (such as airline joint ventures) if such deals are deemed to lessen market competition under the Competition and Consumer Act.
But ACCC chair Rod Sims said this would not be the case in respect of Sydney Airport, with it being a natural monopoly.
Despite it facing some competition with other airports for international fights, Australia’s biggest airport already has a dominant stake.
“The proposed acquisition is therefore unlikely to substantially lessen competition in a market that already has such little competition,” he said.
One concern raised by stakeholders during the process was the airport’s high pricing.
Views expressed that it would make it worse given some players in the consortium share common ownership with other airports – IFM for instance has a stake of over 20% in Melbourne and Brisbane Airports.
While Sims said the ACCC would advocate for a better pricing regime, these concerns were insufficient to allow it to deny a merger.
The deal is now set to proceed at $8.75 per share.
This is a slight discount to its all time high of $8.95 reached at the end of 2019 but well ahead of the initial offer at $8.25, let alone the $4.74 low in March 2020.
Seven actually made a previous bid for Prime in 2019 which the ACCC approved, but Prime shareholders did not.
The ACCC opted to do another review and again found it was unlikely to substantially lessen competition or choice for advertisers and consumers.
“This is because Seven West Media and Prime are not particularly close competitors in the supply of advertising opportunities or the supply of media content, and other competitors will constrain the merged entity,” Sims said.
And finally, the ACCC approved plans of waste management company Cleanway (ASX:CWY) to buy five transfer stations and two landfills from industry peer Suez.
Commenting for the ACCC was commissioner Stephen Ridgeway, who noted Cleanaway would be a stronger competitor but competition in the market wouldn’t lessen.
This is because there’d still be a number of alternative inert landfills that’d compete against Cleanaway.
“A key factor was that Cleanaway currently owns only one putrescible transfer station in western Sydney, and no putrescible landfills, compared to the significant vertically integrated disposal networks of Suez and Veolia,” he said.
“In essence, the proposed acquisition would strengthen the vertically integrated position of Cleanaway and weaken the vertically integrated position of Suez.”