Brookfield in A$9bn Asciano bid

The Canadian asset manager, which raised the world’s second-largest infrastructure fund, is in talks with the Australian ports operator.

Asciano, the Australian shipping and railway freight operator, has received a A$9 billion (€6.2 billion; $6.9 billion) takeover offer from Canada’s Brookfield Infrastructure Partners (BIP).

The cash and scrip offer values the target at A$9.05 per share, a 36 percent premium to the A$6.65 the company was trading at when news of the bid emerged. The news sent shares up 21 percent to A$8.06.

BIP confirmed the approach in a statement which said: “Brookfield Infrastructure notes that the indicative proposal is non-binding and conditional and that exclusive discussions with Asciano in furtherance of a potential transaction are ongoing.

There can be no assurance that a transaction will be completed or of the final terms thereof. Brookfield Infrastructure does not intend to provide further updates in relation to the proposal until appropriate.”

The Sydney Morning Herald reported that US investment bank Goldman Sachs and Australian investment and advisory business Gresham are advising Asciano while BIP has not yet appointed advisers but has been speaking with potential lenders including Citigroup.

BIP – which is listed in New York, Toronto and Amsterdam – was established by, and continues to be managed by, Brookfield Asset Management (BAM). BAM, a global asset manager, has more than $200 billion of assets under management.

In October 2013, BAM closed the second-largest infrastructure fund ever on $7.0 billion, beating its $5.0 billion target and including a $2.8 billion commitment from the firm itself. This followed a $2.7 billion fund the firm closed in 2010.

Sources canvassed by Infrastructure Investor last week suggested the firm may be poised to start raising its next fund towards the end of this year or early next year and that a target of around $10 billion was feasible.

Asciano, which is based in Melbourne, is a freight logistics company operating in railway freight and shipping. It was demerged from Australian transport and logistics firm Toll Holdings in 2007 and owns the Patrick Corporation and Pacific National subsidiaries. It has over 8,000 employees.