Atlas Arteria buys $2bn stake in Chicago Skyway, despite IFM’s legal threat

IFM released a statement against the deal hours before it was agreed, believing it could 'destroy shareholder value'.

After reaching an agreement with owners CPP Investments and OMERS Infrastructure, Atlas Arteria now holds a two-thirds majority stake hold in Skyway Concession Company, the owner and operator of the Chicago Skyway toll road, although it could yet be subject to legal action from IFM Investors.

The Australia-listed Atlas Arteria has paid the Canadian pension pair just north of $2 billion, although the deal may come at a further cost in terms of its relationship with IFM, whose Global Infrastructure Fund owns nearly 20 percent of the company. Atlas Arteria is of the world’s largest developers and operators of private toll roads. It was listed by previous owners as Macquarie Atlas Roads in 2010.

Before the transaction was announced on 12 September, IFM sent a letter to Atlas Arteria on 26 August stating its discontent. Hours before the deal was announced, IFM wrote another letter to Debbie Goodin, chair and director of Atlas Arteria, stating: “We are not supportive of Atlas Arteria pursuing the Chicago Skyway acquisition at the likely sale price because we believe it would be significantly value destructive (as previously highlighted in our letter dated 26 August, 2022). We do not believe the company could construct any credible set of parameters or assumptions in order to justify the pursuit of the Chicago Skyway acquisition.”

The firm added: “We have further engaged with other key shareholders in recent weeks, and it is clear that the company does not have the support of its major shareholders, IFM GIF included, in relation to the pursuit of a large equity funded acquisition, if that acquisition would be dilutive or otherwise destroy shareholder value.”

IFM divulged that it is “exploring its options”, writing in its letter to chairwoman Goodin that, “[if Atlas Arteria] continues with this course of action, IFM GIF will consider all legal options available to it, including seeking an accelerated board transition by way of an EGM, to protect its interests as a shareholder”.

The dispute marks a far cry from the reported takeover attempts IFM was said to be mulling over this summer after building up its stake in the company. The Chicago Skyway operates under a 99-year lease formed in 2005 and was bought by CPPIB, OMERS and Ontario Teachers’ Pension Plan from Ferrovial for $2.8 billion in 2016.

IFM declined to comment for this piece.