Pacific Energy recommends QIC’s A$470m take-private bid

A shorter timeframe to completion and the prospect of an extra payment to shareholders helped QIC edge out a rival bid of the same value from OPTrust and Infrastructure Capital.

The board of ASX-listed Pacific Energy has backed a takeover bid from fund manager QIC worth approximately A$470 million ($323 million; €292 million).

QIC submitted a revised offer of A$1.085 per share for the listed firm on 13 September, upping its bid from an initial offer of A$0.975 made in July. The fund manager is making the take-private bid through its Global Infrastructure Fund, a A$2.35 billion vehicle that closed in March 2017.

The firm was forced to increase its offer to match a rival 10 September joint bid from Canadian pension OPTrust and Sydney-headquartered fund manager Infrastructure Capital Group.

Pacific Energy’s board said in a statement to shareholders today that the increased QIC bid represented a “bona fide match” to the OPTrust/ICG bid. It recommended accepting QIC’s bid because of a shorter timeframe to completion

It also recommended the bid because of a promise from QIC to pay an extra consideration of A$0.005 per share if a A$2.5 million break fee, payable by Pacific Energy to the OPTrust/ICG consortium, is not paid or is refunded before the QIC deal goes through.

QIC has applied to the Australian Government Takeovers Panel to investigate the break fee, which was agreed this month between Pacific Energy and the consortium. Following the consortium’s bid, Pacific Energy entered into a deed with it which would make the listed firm liable to pay the break fee should it not enter into a scheme implementation deed by noon on 17 September.

QIC is calling for the break fee to be cancelled, but the Takeovers Panel has yet to make a decision on whether to conduct an investigation.

Pacific Energy’s major shareholder Kenneth Hall, who owns 48.7 percent of the company’s shares, has confirmed his intention to vote in favour of the QIC bid, along with the rest of the firm’s directors.

The board said it would not sign the competing proposal from OPTrust and ICG. This means it will be withdrawn automatically at noon on 17 September unless enacted by Pacific Energy.

The bid is subject to an independent expert’s report and a shareholder’s vote in November.

QIC in recent months has been actively searching for assets to acquire on behalf of investors in its Global Infrastructure Fund.

It most recently purchased northern Australia marine logistics business Sea Swift for a value understood to be a little under A$300 million, and has acquired stakes in the Port of Melbourne and Brussels Airport. It also entered into a 50-year partnership agreement to invest in Northeastern University’s parking system in the US in January.