Shares in Asciano (AIO) soared yesterday after the port and rail operator confirmed it has received a $8.8 billion offer from Canada’s Brookfield Infrastructure Partners.
The cash-and-scrip offer values Asciano at $9.05, a 36% premium to the $6.65 the company was trading at Tuesday’s close.
And final agreement – if it comes – won’t be for three more months while due diligence happens and Asciano assesses any offer’s final terms and conditions.
The company asked for a trading halt first thing yesterday – made a statement about the mooted offer, and then came out of the hat and jumped more than 21%.
They then eased back in afternoon trading to finish the first day of the new financial year up a very solid 16.8% to $7.70 – well under the mooted offer price.
The news helped boost the local market more than 50 points and shake of those Greek blues.
AIO 1Y – Asciano spikes on Brookfield bid
If Asciano accepts Brookfield’s cash and shares proposal, it will be the seventh-largest inbound takeover of an Australian company and the second-largest by a Canadian firm.
It would also be the largest this year this year, topping January’s, $6.5 billion takeover of Asciano’s former parent company, Toll Holdings, by Japan Post (which is about to start being listed in Tokyo).
Asciano was spun out of Toll back in 2007. The year before Toll had taken over Patricks’ in a bitterly contested takeover. Asciano consists of much of Patricks’ port and rail operations.
In its statement, Asciano said Brookfield approached the company with its cash and scrip proposal on June 26.
And as a result, Asciano said its board and its advisers “concluded that it was in the interests of … shareholders to engage further with Brookfield on an exclusive basis to progress the proposal", yesterday’s statement said.
Discussions are at an early stage and depend on clearing several major steps before proceeding to a formal takeover bid, including allowing Brookfield to complete due diligence and final approval by the investment committee of Brookfield’s parent company Brookfield Asset Management Inc.
It’s understood Brookfield offered Asciano shareholders units in the US-listed Brookfield Infrastructure Partners, as well as cash.
It’s expected to take Brookfield six to eight weeks to run diligence and a similar period for Asciano to assess the offer.
Asciano is capitalised at $6.3 billion and has more $3 billion of debt.
Brookfield Infrastructure Partners has a $US7.2 billion market cap.
Once the bid is produced (that’s if it is), it will have to run the gamut of FIRB and ACCC approval. Neither are expected to be a concern.
Asciano’s Patrick container ports business has faced greater competition from the entry of Hong Kong-based Hutchison Ports, which has new stevedoring operations in Brisbane and Sydney, as well as the growing clout of Qube, which is run by the former management team at Patricks.
The company’s rail operations compete vigorously against Brisbane-based Aurizon, formerly known as QR National.
