Investment firm Brookfield Infrastructure Consortium will purchase 55 percent of Asciano Limited in a deal that will value the rail and port logistics provider at approximately $8.8 billion.
Investment firm Brookfield Infrastructure Consortium officially announced it will acquire 55 percent of Asciano Limited, parent company of Patrick Stevedoring, for $2.8 billion.
The tie-up will combine Brookfield’s current transportation, utilities, energy and communications infrastructure assets in North and South America, Australia, and Europe with those of the Australian rail and port logistics provider.
The purchase was unanimously supported by the Asciano board of directors, and will be implemented by a scheme of arrangement under Australian law, subject to regulatory approvals from the Australian Competition & Consumer Commission, Foreign Investment Review Board, and the New Zealand Overseas Investment Office, according to a statement from Brookfield.
Asciano shareholders will receive an implied value of approximately A$9.15 per Asciano share and Brookfield expects shareholders to vote on approval of the sale in November 2015. If ratified and granted the abovementioned regulatory approvals, the merger will be completed before the end of the year.
Based on the deal, the total valuation of Asciano is approximately $12 billion Australian dollars (U.S. $8.8 billion).
Toronto-based Brookfield said the investment “will be funded through a combination of BIP Units [Brookfield Infrastructure limited partnership units] issued to Asciano shareholders under the Scheme, cash raised under a US$250 million private placement of BIP Units to Brookfield Asset Management (described below), cash on hand and drawings on Brookfield Infrastructure’s revolving credit facilities.” The company expects the acquisition to be immediately accretive to earnings given the “high cash generative nature” of the Asciano and its assets.
Asciano’s business comprises container terminal operations in Sydney, Melbourne, Brisbane and Perth that have a capacity of approximately 4.9 million TEUs; port, terminal and supply chain services that support importers, exporters, ocean carriers, freight forwarders and customs brokers; and nationwide rail operations, including fleet assets of 664 locomotives and over 14,000 wagons, offering mineral and bulk haulage, steel and intermodal service. The company is segmented into four major businesses units: Pacific National Coal, Pacific National Rail, Terminals & Logistics, and Bulk & Automotive Port Services.
In its most recent financial statements, Asciano reported “statutory” earnings before interest and taxes of A$711.5 million in fiscal year 2015 (ended June 30, 2015), a 21.8 percent increase from FY 2014, despite revenues falling 3.9 percent to A$3.84 billion for the same period.
“This transaction enables us to acquire premier transport infrastructure assets in a geography we know well and establish two leading global platforms, with solid long-term prospects,” Sam Pollock, CEO of Brookfield Infrastructure, said in a statement. “Combining Asciano’s Australian container terminals with our existing assets in North America and Europe provides the foundation for a global container platform. In addition, Asciano’s leading above-rail operations, together with our Australian and Brazilian logistics businesses, create a powerful, international rail logistics business.
“We welcome Asciano shareholders, and believe that combining our rail, port and logistics assets in Brookfield Infrastructure’s global portfolio will create significant long-term value. Working together, we will have the opportunity to leverage our international relationships, positioning ourselves well for future growth.”
“We are pleased to recommend to our shareholders this compelling transaction with Brookfield Infrastructure,” added Asciano Chairman Malcolm Broomhead. “Asciano’s businesses are unique and highly strategic. Pacific National is one of the largest providers of above rail freight haulage services in Australia. Patrick is a leading business in bulk ports and stevedoring, with a presence in over 40 sites in Australia and New Zealand.
“The primary focus of the Asciano Board has always been, and continues to be, to act in the best interests of shareholders and maximise shareholder value. After careful consideration of all the options available to the Company, the Asciano Board has unanimously concluded that a sale of the Company at a significant premium to market value, and on terms that we think reflect fair value, is in the best interests of all shareholders.”
Brookfield Infrastructure acquires majority stake in Australian transportation company
