Brookfield, Qube Consider Joining Forces in Bid for Asciano

  • Groups discussing joint offer of A$9.28 per share in cash
  • Board says potential deal is `likely to be attractive'

Groups led by Brookfield Asset Management Inc. and Qube Holdings Ltd. are considering joining forces to buy Asciano Ltd. in a deal valuing the Australian port and rail operator at A$9.1 billion ($6.6 billion).

The two groups, which have been dueling over Melbourne-based Asciano for months, are discussing a joint cash offer of A$9.28 per share, according to a statement from the target to the ASX on Tuesday. That’s 4.6 percent higher than the target’s closing price on Monday.

Asciano’s board views the potential deal, which would see the company’s ports and rail businesses broken up, as “likely to be attractive” to shareholders though notes the discussions are at a preliminary stage, according to the statement.

Asciano last week switched allegiance to a cash-and-stock offer from Qube, New York-based Global Infrastructure Management LLC, Canada Pension Plan Investment Board and a unit of China Investment Corp. Qube currently holds 19.99 percent of Asciano, while Brookfield owns 19.33 percent, according to Bloomberg-compiled data.

“In the absence of any alternative superior proposal capable of acceptance, the Asciano Board continues to recommend the Qube Consortium proposal as announced on Feb. 16,” it said Tuesday.

Asciano shares were 1.6 percent higher at A$9.01 at 11:01 a.m. in Sydney while Qube gained 8 percent to A$2.17.

Asset Split

The Brookfield consortium also includes GIC Private Ltd., British Columbia Investment Management Corp. and Nitro Corp., Asciano said. The Australian Competition and Consumer Commission is due to rule on Qube’s existing offer on March 24.

Under the joint proposal being discussed, Global Infrastructure Management, CPPIB, CIC Capital and certain members of the Brookfield consortium apart from Brookfield would acquire Asciano’s rail business.

Qube, Brookfield and members of the Brookfield consortium would acquire 100 percent of Asciano’s Patrick container terminal business, aside from a 50 percent interest in ACFS Port Logistics, for A$2.9 billion, according to a letter from Brookfield to Asciano.

Asciano expects any binding proposal would be subject to a number of conditions including approval by the ACCC and the Foreign Investment Review Board.

“This potentially brings it to an end,” said Shannon Rivkin, Sydney-based investment director at Rivkin Securities Pty. “That’s still pending them agreeing on the final details, but it brings to an end the chance that there will be any more counter bids.”

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