Fight for Asciano Heats Up as Qube Group Offers $6.2 Billion

  • China's CIC joins bidding group for Australian rail, port firm
  • Asciano's board continues to recommend lower Brookfield offer

Qube Holdings Ltd. and investors in North America and China made a counteroffer for  Asciano Ltd. valuing the Australian rail and port operator at A$8.85 billion ($6.22 billion), topping a bid from Canada’s Brookfield Asset Management Inc.

The group, which now includes China’s sovereign wealth fund, is offering A$6.97 per share in cash and one Qube share for the Asciano stock it doesn’t already own, it said in a statement Thursday. That equates to A$9.07 per share, based on Qube’s closing price Wednesday, and is 6.7 percent higher than the target’s last close.

The bid puts pressure on Melbourne-based Asciano’s board to reconsider its support for Brookfield’s offer. The value of that cash-and-stock proposal, made in August through its New York-listed Brookfield Infrastructure Partners arm, has slipped to A$8.82 per share amid a stock slide that started in November.

“The fact that Qube’s bid is a little bit ahead now probably puts them in the driving seat,” said Shannon Rivkin, a director at Rivkin Securities Pty in Sydney. The competition regulator may have the final say next month, he said.

Brookfield has pledged to sell rail assets in Western Australia and ensure the independent operation of its Dalrymple coal terminal to gain clearance from Australia’s competition watchdog, which will rule on the proposal by Feb. 18.

While Asciano’s board is considering Thursday’s offer by Qube, New York-based Global Infrastructure Management LLC, Canada Pension Plan Investment Board and a unit of China Investment Corp., it continues to unanimously recommend the Brookfield bid, the target said in a separate statement.

Asciano shares rose 3.7 percent to A$8.81 at 11:13 a.m. in Sydney, compared to a 0.6 percent fall on the benchmark S&P/ASX 200 Index. Qube declined 0.5 percent.

The battle for control of Asciano’s Pacific National rail business and Patrick stevedoring operations at ports in Melbourne, Sydney and Brisbane pits two of Canada’s biggest investors against each other.

Under the offer announced Thursday, Qube would acquire the Patrick terminal business and 50 percent of Australian Amalgamated Terminals. Global Infrastructure Management, CPPIB and CIC Capital would acquire the rail business. The group already has a 20 percent stake in Asciano, compared to Brookfield’s 21 percent.

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