Deals

CP2 makes A$2.2 billion offer for ConnectEast

CP2 has managed to raise A$1.4bn from institutional investors including Korea's National Pension Service, the UK Universities Superannuation scheme, and Holland's APG to help fund its bid for the toll road operator. The offer is backed by ConnectEast's directors.

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Australian infrastructure investment firm CP2 has made an offer to acquire ConnectEast, the Sydney-listed company that operates Melbourne’s EastLink toll road. The bid has been unanimously recommended by the toll road operator's independent directors, CP2 stated.

CP2 said in a statement to the Australian Securities Exchange last week that it would offer A$2.2 billion (€1.7 billion; $2.4 billion) to acquire the 65 percent of EastLink that it does not already own.  CP2 said the cash offer of A$0.55 per share represented a 22.2 percent premium over ConnectEast’s July 21 closing price of A$0.45.

“We believe the proposal, which has been recommended by the ConnectEast independent directors, is highly attractive for ConnectEast security holders,” Syd Bone, CP2 managing director, commented in a statement.

CP2 plans to make the acquisition through a vehicle called Horizon Roads, according to a presentation to ConnectEast shareholders.

Other investors in the acquisition include the UK Universities Superannuation Scheme, the New Zealand Superannuation Fund, Danish pension fund manager ATP, Dutch pension fund manager APG, Korea’s National Pension Service, the China Investment Corporation, the Teachers Insurance and Annuity Association of America, and the Korean Teachers Credit Union. CP2 said it has managed to raise A$1.4 billion from these investors.

“ConnectEast is a good asset for patient, long-term investors,” Bone explained.

Shareholders are expected to vote on the deal in September, according to a statement by ConnectEast company secretary Tony Hudson. Hudson said the plan is subject to approvals by the State of Victoria and the Foreign Investment Review Board.

ConnectEast won the contract from the Victorian government to build and operate the EastLink road in late 2004 and operates the road under a 39-year concession. CP2, which manages assets of about A$2 billion, is ConnectEast’s largest shareholder and has been increasing its stake in the company since 2008.

In May 2010, CP2, together with the Ontario Teachers’ Pension Plan Board and the Canada Pension Plan Investment Board, offered A$7.2 billion for Australian toll road developer Transurban, but the bid was ultimately rejected by shareholders.