Brookfield, Qube Join Forces in A$9.1 Billion Asciano Bid

  • Deal ends months of dueling for Australian rail, port operator
  • Groups plan to carve up assets to avoid competition concerns

Former rival groups led by Brookfield Asset Management Inc. and Qube Holdings Ltd. joined forces to buy Asciano Ltd. in a deal valuing the Australian port and rail operator at A$9.05 billion ($6.8 billion).

The two groups made a joint cash offer of A$9.28 per share, according to a statement to the ASX on Tuesday. That’s 4.6 percent higher than the target’s closing price on Monday. The deal is unanimously recommended by Asciano’s board.

The agreement ends months of dueling for Asciano, which runs container terminals from Perth to Sydney and a rail-freight business hauling coal, grain and other bulk goods. Annual profit at Asciano will climb every year through at least
2020, according to analyst forecasts compiled by Bloomberg. In coming together, the groups propose to split up the assets in an effort to overcome concerns from Australia’s competition watchdog.

“It looks like a foregone conclusion,” said Evan Lucas, a market strategist at IG Ltd. in Melbourne. “If you’re a shareholder of Asciano, the final price is good -- much more value than could be extracted in normal trading.”

Asciano shares rose 1.3 percent to A$8.98 at 1:30 p.m. in Sydney trading, while Australia’s benchmark S&P/ASX 200 index dropped 1.3 percent. Qube remained halted after the company said it planned to sell A$800 million of shares to help fund the acquisition.

Splitting Up

Qube, together with Brookfield and its consortium partners, will acquire the Patrick container terminals business for A$2.92 billion in a joint venture, with the Pacific National rail business split off and acquired by a different grouping of investors, according to the statement. The deal is subject to clearance by the Australian Competition and Consumer Commission.

The Qube-led group includes New York-based Global Infrastructure Management LLC, Canada Pension Plan Investment Board and a unit of China Investment Corp. The Brookfield consortium includes GIC Private Ltd., British Columbia Investment Management Corp. and Qatar Investment Authority.

Under the transaction, the Pacific National rail business will be acquired by GIC, Canada Pension Plan, Global Infrastructure Partners and British Columbia via a jointly owned entity. Qube will buy half of the Patrick container terminals business and the remainder will go to Brookfield, GIC, British Columbia and Qatar Investment

The Brookfield consortium will buy the Bulk & Automotive Ports Services Business, including the 50 percent stake in Australian Amalgamated Terminals for A$925 million.

Under the deal, the groups are paying A$9.15 per share in cash, once Asciano’s interim dividend of 13 cents per share announced on Feb. 24 is stripped out.

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