Asciano backs Qube’s revised proposal

The Australian rail and ports operator is now favouring a revised proposal from the Qube consortium despite being informed that Brookfield is willing to bring in two additional investors.

The fight over one of Australia’s largest logistics companies has intensified once again with Asciano now supporting a revised proposal from a consortium comprising Qube and Global Infrastructure Partners (GIP) for the first time since Brookfield Infrastructure Partners announced plans to acquire port operator last August.

Toronto-based Brookfield, along with its partners the British Columbia Investment Management Corporation (bcIMC) and Singapore’s sovereign wealth fund GIC, has until today to match Qube’s proposal, which Asciano's board has called “superior”.

The Qube consortium, which also includes the Canada Pension Plan Investment Board (CPPIB) and China's CIC Capital, submitted a binding proposal for Asciano on 28 January offering Asciano shareholders A$6.97 (€4.50; $4.94) and one Qube share for every Asciano share. Earlier this month, the group increased the cash portion of its offer by A$0.07, valuing the company at A$9 billion.

Asciano’s determination that the Qube proposal is superior came one day after Brookfield chief executive Sam Pollock wrote a letter to Asciano board chairman Malcolm Broomhead informing him that the Toronto fund manager was re-working its previous cash and stock proposal to an all-cash offer at a value of A$9.28 per share. Brookfield said it would also bring in two new investors and limit its participation in the transaction in order to appease the Australian Competition and Consumer Commission (ACCC).

Although the Brookfield consortium had a head-start when it set out to acquire Asciano, the ACCC’s concerns that Brookfield’s acquisition of the Australian ports operator would lead to a substantial lessening of competition in markets for the supply of above-rail haulage services in Western Australia and Queensland have slowed and frustrated the takeover attempt, resulting in multiple revisions of the initial proposal.

According to a statement issued by Asciano last week, although the board has decided the Qube proposal is superior, it cannot change its recommendation until the matching rights period expires.

“Should Brookfield Infrastructure elect to exercise its right to submit a matching or superior proposal, the Asciano Board will give that full consideration,” the company said in the statement.

“If Brookfield Infrastructure does not submit a matching or superior proposal within the required time frame, the Asciano Board will be able to change its recommendation and execute the Qube Consortium Agreements,” the company continued.

If the board does change its recommendation in favour of the Qube proposal, Brookfield will receive an A$88 million break fee.