SYDNEY Reuters Sydney Airport Holdings Pty Ltd said on Thursday it would reject a A22.26 billion 16.6 billion takeover proposal from a group of infrastructure funds, the biggest of a frenzy of Australian deals fuelled by recordlow interest rates.

The operator of Australias largest airport said directors had unanimously concluded the proposal undervalued the airport and was not in the best interest of shareholders. If successful, it would have been one of Australias biggest buyouts.

Recordlow interest rates have prompted pension funds and their investment managers to chase higher yields, leading to recent asset purchases from Telstra Corp and Qube Holdings.

Electricity polesandwires company Spark Infrastructure Group rejected a A4.91 billion buyout proposal from private equity firm KKR Co Inc and Ontario Teachers Pension Plan Board but left open the chance of some engagement.

Last week, the Sydney Aviation Alliance, a consortium of IFM Investors, QSuper and Global Infrastructure Partners offered A8.25 a share, for a premium of 42 to pandemicravaged Sydney Airports last trading price before the offer.

Shares of Sydney Airport were flat at about A7.80, a sign the market expects further negotiations.

The proposal is contingent on a board recommendation and access to due diligence. Sydney Airport said its board would only accept a buyout deal that would deliver and recognise appropriate longterm value.

The board is obviously trying to play hardball, but we do think…