Sense prevails in the battle for control of Asciano – after months of sniping at each other and spending huge amounts on accountants, lawyers and other advisers, Qube Logistics and Brookfield Infrastructure, and their various partners, have abandoned separate bids for Asciano Limited and will mount a joint one at $9.28 a share.
The announcement of the $9.09 billion new joint offer came a week after it appeared Qube had gained the advantage in the bidding war for Asciano when Brookfield failed to reveal a new. higher bid on Monday – after a deadline of February 18 expired.
That date was when Brookfield would have been free to launch a new higher offer with new partners added to its group. That didn’t happen and a day later the surprising news emerged of a joint offer.
But both Qube and Brookfield made it clear that if there was no agreement with Asciano on the new joint offer, then they would both resort to their previous offers and pursue those, with Brookfield saying it will produce a second, higher offer.
Asciano’s shares closed at $8.87 on Monday. Qube’s offer price of $7.04 cash and one Qube share (worth $2.01 on Monday) meant Asciano shares had a value of $9.05.
Investors gave the new proposal a big thumbs up yesterday, boosting Qube shares by 10% to $2.21. Asciano shares edged up 1.5% to $9.01, as investors played cautious with its shares and chased Qube’s higher.
Asciano chairman Malcolm Broomhead received letters yesterday morning from Qube and Brookfield proposing a joint takeover.
"The Asciano board consider that the $9.28 per Asciano share cash consideration associated with the potential transaction is likely to be attractive to Asciano shareholders," the company said in a statement yesterday.
"However, Asciano notes that the discussions are preliminary and a number of steps would need to occur prior to any binding proposal eventuating."
Under the joint proposal, Qube would acquire Asciano’s Patrick container terminals in a 50-50 joint venture with Brookfield and Brookfield’s consortium partners for $2.9 billion.
Qube’s consortium partners – Global Infrastructure Partners, the Canada Pension Plan Investment Board and China’s CIC Capital – would join with some of Brookfield’s consortium members to buy Asciano’s Pacific National rail haulage business via a scheme of arrangement.
Brookfield, which already owns a rail track business in Western Australia, would not have a stake in Pacific National, which could avoid the ongoing problems it has had with the ACCC, the competition regulator.
Qube managing director Maurice James said Patrick’s ports businesses would benefit from developing links with Brookfield’s existing international container port operations.
“The new proposal would represent a common sense outcome which I believe would deliver the best result for all stakeholders,” he said yesterday.
"Asciano shareholders would receive cash for their company, Qube would add container terminals to its business and partner with a major infrastructure player and the consortia investors would obtain exposure to world class rail and port infrastructure."
Qube said the joint proposal is designed to address concerns raised by the ACCC.
The Commission had been reviewing both Qube and Brookfield’s proposals, and has raised concerns about Brookfield’s control of rail in WA. West Australian grain farmers have expressed their concerns about Brookfield’s bid for Asciano. Yesterday it revealed it has suspended its review because of news of the joint bid.
The review will be restarted once the fate of the joint bid is known.
Brookfield and some of its consortium plan to buy Asciano’s bulk and automotive (car transport and storage) ports services businesses, including a 50% interest in Australian Amalgamated Terminals. Qube would have an option to later acquire the 50% interest in AAT if it receive ACCC clearance.
Qube and Brookfield said they would "undertake negotiations as expeditiously as possible" to determine whether a formal proposal could be developed".
"The discussions remain preliminary, indicative and non-binding and there is no agreement, arrangement or understanding between the parties at this stage," Qube said.
If a formal proposal cannot be agreed, Qube’s previous proposal – which was recommended by Asciano’s board on February 16 – will stand, Qube said.
Brookfield said it would also continue to develop a rival proposal if it could not reach agreement with Qube.
