Brookfield's $6.5 Billion Asciano Bid Faces Regulatory Hurdle

  • ACCC concerned about reduced rail haulage competition
  • Regulator to decide on takeover Dec. 17 after consultation

Brookfield Infrastructure Partners’s proposed A$8.9 billion ($6.5 billion) acquisition of Asciano Ltd. faces a more detailed regulatory review after the nation’s competition watchdog said it was concerned the deal could lessen competition in rail haulage.

The Australian Competition & Consumer Commission deferred a decision on the proposal until Dec. 17 and asked for further comments from others in the market, according to a statement from the regulator on Thursday. Market participants had raised “strong concerns” about Brookfield combining its existing rail assets with Asciano’s Pacific National rail business, the ACCC wrote. Asciano shares tumbled in Sydney trading.

“The ACCC is concerned that the vertical integration will lead to a substantial lessening of competition in related markets for the supply of above rail haulage services in Western Australia and Queensland,” Chairman Rod Sims said in the statement.

Brookfield Asset Management Inc., Canada’s largest alternative asset manager, in August led a group that agreed to buy the Australian company in a cash and stock deal to gain control of the Pacific National rail unit and stevedoring businesses at ports in Melbourne, Sydney and Brisbane. The transaction would be the group’s largest in Australia, exceeding the A$4.8 billion it paid in 2007 for Multiplex Group, the builder of London’s Wembley Stadium.

Asciano fell as much as 12 percent, the biggest intraday decline in more than six years, and was down 7.7 percent at A$7.83 at 10:02 a.m. in Sydney.

The Canadian company owns the Westnet rail business in Western Australia and controls the Dalrymple Bay Coal Terminal in Queensland. “Market participants have raised strong concerns about Brookfield’s ability and incentive to favor Pacific National through its Brookfield Rail and DBCT businesses,” the ACCC wrote.

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