Asciano bid heats up with binding offer from GIP

After acquiring a 19.99 percent stake in Asciano last October to block a rival proposal by Brookfield Infrastructure Partners, a consortium including Global Infrastructure Partners (GIP) has once again turned up the heat on a bidding contest for one of Australia’s largest rail and port operators by submitting a binding offer.

The latest proposal from the Qube-led team, which along with GIP includes the Canada Pension Plan Investment Board (CPPIB) and China’s CIC Capital, offers Asciano shareholders A$6.97 (€4.50; $4.94) and one Qube share for every Asciano share. 

The offer, which values Asciano at A$8.9 billion, “represents superior value to the Brookfield proposed transaction”, Qube said in a statement filed with the Australian Securities Exchange (ASX).

The Brookfield proposal is currently valued at A$8.77 per Asciano share, down from an implied value of A$9.21 in early November, when the Canadian fund manager announced a takeover agreement with Asciano. This is due to a dip in Brookfield’s share price from $41.36 at the time to $32.82 on 25 January.

According to the statement, Qube Holdings, also an Australian logistics firm, would acquire Asciano’s Patrick container terminal business and 50 percent interest in Australian Amalgamated Terminals (AAT). GIP, CPPIB and CIC Capital would acquire Asciano’s rail business, while the remaining bulk, auto and ports services businesses and 50 percent interest in ACFS Port Logistics (BAPS) would be sold to an entity to be established and owned by GIP, CPPIB and CIC Capital but with the intention to later sell those assets to a third party.

“The proposed transaction has been structured to minimise the potential for perceived competition issues and the consortium does not anticipate that there will be any material adverse ACCC [Australian Competition and Consumer Commission] concerns,” Qube said in the ASX filing.

The Qube-led consortium has been engaging with the ACCC since November when it made a non-binding offer for Asciano.

The lack of a regulatory hurdle that Qube expects could be a significant advantage over the proposal put forth by the Brookfield consortium. The latter team had to commit to divesting Pacific National’s intermodal business, which operates the interstate freight service around Australia, and Pacific National’s limited bulk operations in Western Australia, to an independent party. 

It also had to ensure independent operation and decision-making at Brookfield’s Darlymple Bay Coal Terminal, in order to address concerns that Brookfield’s acquisition of Asciano would lead to a substantial lessening of competition in markets for the supply of above-rail haulage services in Western Australia and Queensland.

Brookfield, which is bidding for Asciano along with its partners, the British Columbia Investment Management Corporation and Singapore’s sovereign wealth fund GIC, submitted its proposed remedies to the Commission in late December. The ACCC had invited the market to comment on the proposed undertakings by 22 January, stating it would have a final decision by 18 February.

In a separate statement on Thursday, Asciano said its board had received the Qube consortium’s proposal and taken it into consideration.

“At the present time, the Asciano Board continues to unanimously recommend the Brookfield proposal announced on 9 November 2015 in the absence of a superior proposal,” it added.

On its part, Qube has asked Asciano’s board to respond to its binding offer by 5 February.

GIP and Brookfield declined to comment.