Toronto-based Brookfield Infrastructure has announced a binding agreement, together with institutional partners, to acquire Asciano, the Australian rail and port logistics company.
The deal, which has been unanimously approved by Asciano’s board of directors, implies an enterprise value for the firm of around A$12 billion (€8.0 billion; $8.9 billion).
Brookfield Infrastructure is investing US$2.8 billion for a stake of approximately 55 percent. Investments from Brookfield funds (23 percent) and two unnamed institutional partners in the deal (11 percent each) will take the equity total up to US$5.1 billion.
The deal also includes the assumption of A$3.1 billion in net debt and an acquisition facility of A$1.9 billion.
Brookfield’s equity investment will be funded by a combination of Brookfield Infrastructure (BIP) units issued to Asciano shareholders under a scheme of arrangement, cash raised under a US$250 million private placement of BIP units to Brookfield Asset Management, cash on hand, and drawings on Brookfield Infrastructure’s revolving credit facilities.
The deal sees Asciano shareholders receive A$9.15 per share under the scheme of arrangement. It implies a 39 percent premium to the average Asciano share price since 1 July 2015 – the date when Asciano was required for regulatory reasons to announce that discussions about a deal were taking place.
Asciano’s port and rail assets in Australia include: container terminal operations in cities including Sydney, Melbourne, Brisbane and Perth with a capacity of approximately 4.9 million TEUs (twenty foot equivalent units); port, terminal and supply chain services supporting shipping lines, importers, exporters, freight forwarders and customs brokers; and nationwide rail haulage operations comprising 664 locomotives and over 14,000 wagons with the capacity to haul 180 million tonnes of freight diversified across mineral and bulk haulage, steel and intermodal.
“This transaction enables us to acquire premier transport infrastructure assets in a geography we know well and establish two leading global platforms, with solid long-term prospects,” said Sam Pollock, chief executive officer of Brookfield Infrastructure, in a statement.
He added: “Combining Asciano’s Australian container terminals with our existing assets in North America and Europe provides the foundation for a global container platform. In addition, Asciano’s leading above-rail operations, together with our Australian and Brazilian logistics businesses, create a powerful, international rail logistics business.”
Asciano shareholder approval for the deal is to be sought at a meeting to be held in mid-November, with the deal expected to complete by the end of the year subject to various regulatory approvals.