Qube Seeks to Block Brookfield's $6.3 Billion Asciano Takeover

  • Logistics firm offers to buy Asciano shares for A$8.80 apiece
  • Qube may seek alternative deal involving Asciano carve-up

A group led by Qube Holdings Ltd., the Australian logistics operator, is seeking to increase its Asciano Ltd. stake to 19.9 percent in an attempt to block an A$8.9 billion ($6.3 billion) takeover of the rail and port operator by Brookfield Infrastructure Partners.

Qube’s consortium is offering to buy Asciano shares at a fixed price of A$8.80 apiece, representing a 16.4 percent premium to the last close, according to terms for the deal obtained by Bloomberg on Thursday. The group, which includes two unnamed financial co-investors, won’t vote for Brookfield’s offer for Asciano, the terms show. 

The Qube group may start talks with Asciano and the Canadian asset manager about an alternative deal involving a carve-up of Asciano assets, the terms show. Qube Chairman Chris Corrigan previously oversaw the Pacific National business that now forms the core of Asciano’s railway operations. 

Asciano shares plunged this month after the Australian Competition & Consumer Commission said it was concerned that Brookfield’s acquisition could lessen competition in rail haulage in Western Australia state, where Qube also has operations, and Queensland. The regulator deferred a decision on the proposal until Dec. 17 and asked for further comments from others in the market, according to an Oct. 15 statement.

Strategic Options

The Qube-led group already has an interest in 5 percent of Asciano and “has an indication over” another 5 percent stake, according to the terms. While the group is considering a number of options, including holding a strategic stake in Asciano and seeking board representation, it has yet to decide which path to pursue, the terms show. 

UBS Group AG is arranging Qube’s share purchase. Richard Baker, a spokesman for Asciano, declined to comment, while a representative for Brookfield said he couldn’t immediately comment. A spokesman for Qube didn’t immediately respond to a phone call and e-mail seeking comment.

Brookfield Asset Management Inc., Canada’s largest alternative asset manager, in August agreed to buy Asciano for cash and stock in its Brookfield Infrastructure Partners arm to gain control of the Pacific National rail unit and Patrick stevedoring businesses at ports in Melbourne, Sydney and Brisbane. The offer had an implied value of about A$9.15 a share when announced on Aug. 17. 

Competition Concerns

Brookfield already owns the Westnet rail business in Western Australia and controls the Dalrymple Bay Coal Terminal in Queensland. The Canadian company said Oct. 15 it was committed to resolving the issues identified by the ACCC and was confident that all concerns could be fully addressed.

Corrigan sold the Pacific National rail business as part of the A$6.2 billion sale of his Patrick Corp. to Toll Holdings Ltd. in 2006. Toll spun off the port and rail assets into Asciano in 2006 and retained the logistics and parcel business, which was eventually bought by Japan Post Holdings Co. for A$6.49 billion earlier this year.

Sydney-based Qube has a port and bulk unit with operations at the iron ore terminal of Port Hedland and at Port Kembla which handles cargo including cars and heavy machinery. Its logistics division provides road and rail container transport, warehousing and freight forwarding services.

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