Brookfield Infrastructure and Qube Holdings have ended their bidding war for Asciano Ltd., partnering with several global funds to purchase the Australian rail and port operator in a deal worth $6.7 billion.
Toronto, Canada-based Brookfield Infrastructure Partners LP and Australia’s Qube Holdings Ltd. appear to have ended their bidding war for Australian rail and port operator Asciano Ltd.
The two firms have partnered with several other global funds to acquire Asciano in a deal valued at around $8.92 billion Australian (U.S. $6.7 billion), according to statements from Brookfield and Qube.
Brookfield made its initial bid for Asciano in June 2015, and a separate group led by Qube jumped in with its own offer a few months later. Both groups bought up minority shares in the company in an effort to stake their claim, and rumors circulated a few months ago the two could team up on a joint bid.
Brookfield and Qube earlier this week said they have partnered with GIC Private Limited, British Columbia Investment Management Corporation, the Qatar Investment Authority and other institutional partners to submit a binding cash offer for Asciano valued at A$9.15 per share. Under the deal, Asciano shareholders would also receive a previously declared dividend of A$0.13.
According to the agreement, Asciano’s main business units – Pacific National Coal, Pacific National Rail, Terminals & Logistics, and Bulk & Automotive Port Services (BAPS) – will be broken up and taken over by the various investing partners.
Brookfield and Qube will form a joint venture with the other investors to purchase Asciano’s Terminals & Logistics segment, which includes subsidiary Patrick Corp., in a 50-50 split for A$2.92 billion. The division is the largest provider of container stevedoring services in the Australian market, with operations in the four largest container ports in Australia: East Swanson Dock in Melbourne, Port Botany in Sydney, Fisherman Islands in Brisbane and Fremantle in Western Australia.
Brookfield’s consortium will acquire the BAPS business, which manages bulk ports and provides an integrated service for the transportation, processing and storage of motor vehicles, for A$925 million.
A group of institutional investors, including a unit of China Investment Corp. and Singapore’s GIC Private Ltd., will acquire the rail assets of Pacific National Coal, the second largest mover of coal by rail in Australia, and Pacific National Rail, which provides intermodal rail services and bulk haulage rail services for commodities other than coal, as well as hook and pull services for passenger trains.
According to Brookfield, the transaction value represents a premium of around 41.0 percent to the undisturbed volume weighted average price of Asciano shares during the five days leading up to and including June 30, 2015, when initial negotiations were announced.
“We are pleased to deliver a joint transaction that is on an all-cash basis and clearly superior to any previous offer,” Sam Pollock, CEO of Brookfield Infrastructure, said of the deal. “In addition, our transaction has been structured with a view to eliminating many of the issues associated with the prior offers, and therefore delivering a high degree of transaction certainty for Asciano shareholders.”
“I believe the agreement we have now reached represents the most common sense resolution to the ownership of Asciano and delivers the best result for all stakeholders,” added Qube Managing Director Maurice James.
The deal, which Asciano’s board of directors has recommended the shareholders accept, will still require approval from various court and regulatory bodies, including the Australian Competition & Consumer Commission (ACCC), Australian Foreign Investment Review Board (FIRB), New Zealand Overseas Investment Office (OIO), and the European Commission.
Brookfield and Qube expect to submit detailed documentation of the offer in May, with Asciano approval to be sought at a shareholder meeting in early June 2016. The companies project the merger will be completed sometime before the end of the second quarter, subject to the abovementioned regulatory approvals.
Competing bidders join forces to acquire Asciano
