‘No’, said Transurban for a second time in seven months to cheap takeover approaches from two big Canadian investment funds, this time with the added firepower from a big local investor.
The Canada Pension Plan Investment Board (CPPIB) and Ontario Teachers Pension Plan Board (OTPP) offered $5.25 last November, only to be rejected.
Late Tuesday they offered, with CP2 Limited, a local fund, $5.57, (but stop the $542 million Lane Cove Tunnel purchase fund raising) and got a similar rejection yesterday.
A second version of the offer was made at $5.42 yesterday which allowed the Lane Cove Tunnel deal to proceed. It was also rejected.
TCL said of the first (the $5.57 proposal) that it was inadequate for a number of reasons, but that the price "represents a premium of only 21% to the underwritten issue price for the group’s securities in the current capital raising and a premium of only 14% to the Theoretical Ex Rights Price under that issue".
It said the second proposal "has likewise been rejected by the Board of Transurban on the grounds of both value and certainty".
Transurban said that despite the rejection, it is still happy to explore ways of working with the would-be suitors.
The three funds control 42% of Transurban’s issued capital, with CP2 controlling 14%.
Despite this dominant position, the trio know they can’t launch a hostile bid (to buy all the outstanding securities would cost close to $7 billion) because they might not get 100% and total control.
A scheme of arrangement is a more effective way of doing it because it helps to nail down a firm recommendation from management before the process starts.
Transurban said yesterday the proposed offers from the three funds and containing two alternative offers, were uncertain and inadequate.
"The Board has great confidence in Transurban’s outlook and prospects," the company said in a statement yesterday.
"Together with Transurban’s management team and staff, it will continue to seek ways to maximise value for all Transurban security holders.
"Notwithstanding this rejection of the bidding group’s proposals, Transurban remains willing to explore opportunities for constructive and harmonious relationships with the members of the bidding group into the future that will serve the interests of all Transurban security holders."
The bids would involve the acquisition of all the issued stapled securities of Transurban through a scheme of arrangement, initially at $5.57 per security, on condition Transurban dropped its current capital raising to fund its acquisition of the Lane Cove Tunnel in Sydney.
Transurban said the second bid had come in "early today", offering $5.42 per security but allowing the capital raising to proceed.
Transurban shares were placed in a trading halt on Monday, prior to its announcement of the capital Lane Cove Tunnel acquisition and capital raising at $4.60 a share.
They remained halted yesterday while the capital raising, which was 51% complete on Tuesday night, continues.
They last traded at $4.92.
