Brookfield Buys 15% Asciano Stake, Switches Deal Method

  • Takeover offer on same terms as original A$8.9 billion deal
  • Lower acceptance threshold to help counter Qube opposition

Brookfield Infrastructure Partners said it bought a 14.9 percent stake in Asciano Ltd. as it seeks to salvage its A$8.9 billion ($6.4 billion) acquisition of the Australian rail and port operator and fend off a rival plan from Qube Holdings Ltd.

Brookfield has also entered into an arrangement giving it a further 4.3 percent of Asciano, the company said in a statement Thursday. The total paid for the stake was about $1.2 billion, it said.

Brookfield now plans to switch to a takeover offer for Asciano, which will be easier to complete than its previous proposal to acquire the company through a scheme of arrangement, according to a person familiar with the matter. The new approach could help it get around opposition from a Qube-led consortium, which bought 19.99 percent of the Australian firm last month in an attempt to carve up Asciano’s assets. 

Brookfield Infrastructure is the publicly-traded subsidiary of Toronto-based Brookfield Asset Management Inc., Canada’s largest alternative asset manager.

The takeover offer only needs 50.1 percent of investors to accept, according to terms for the deal obtained by Bloomberg on Thursday, while Brookfield’s original method using a scheme of arrangement would have required 75 percent of voting shareholders to agree. The cash and stock consideration being offered by Brookfield, which had an implied value of about A$9.15 per share when announced on Aug. 17, remains unchanged, according to the terms. 

Brookfield said it has requested a deferral of the scheme meeting scheduled for Nov. 10.

Competition Watchdog

The new offer is still subject to approval from Australia’s competition watchdog, the terms show.

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. That deal was threatened last month when Qube, an Australian logistics operator, teamed up with Canada Pension Plan Investment Board and Global Infrastructure Partners in an attempt to block the proposal.

Citigroup Inc. and Macquarie Group Ltd. managed the stake purchase for Brookfield, Thursday’s terms show. 

The Australian Financial Review reported details of the equity swap earlier, without saying where it got the information. A representative for Brookfield declined to comment.

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