Transurban rejects latest takeover bid

The Australian toll road operator has again said no to a takeover bid from CPPIB, OTPP and CP2 on the basis that their A$7.2bn offer was too low. The rejection raises the possibility that the bidders – which hold 40% of Transurban – will now choose to sell their stakes and exit the company quickly.

Seven months after rejecting a takeover bid from two of its existing shareholders, Australian toll road operator Transurban has again said no to a revised offer from the same bidders and a new investor.


The Canada Pension Plan Investment Board (CPPIB), Ontario Teachers’ Pension Plan Board (OTPP) and new consortium member CP2 submitted a revised offer for Transurban valuing it at A$7.2 billion (€5.1 billion; $6.5 billion) or A$5.57 per share. The proposal would be conditional on Transurban halting the A$542 million capital raising it has initiated to fund the purchase of Sydney’s Lane Cove Tunnel.

But Transurban’s board of directors, advised by Lazard, has rejected the proposal saying that it is too low, representing “a premium of only 21 percent to the underwritten issue price for the group’s securities,” the company said in a statement. It also rejected a secondary proposal from the consortium offering A$5.42 per Transurban share if the company chooses to go ahead with its planned capital raising.

CPPIB and OTPP had initially offered to take over Transurban for A$5.25 per share late last year. The offer, which valued the company at A$6.81 billion, was rejected for being too low.

The latest rejection raises the possibility that the three consortium members, which hold about 40 percent of Transurban, will retaliate by selling their stakes and exiting the company quickly. A thinly-veiled threat to that affect came from an anonymous source speaking to Dow Jones:

“What is clear is that [Transurban’s] management have adopted a stand-alone-at-all-costs position at the expense of shareholders. What is clear is that the bidders have a history of exiting positions quickly when they believe that it is in the best interests of their investment,” the source warned, adding that the consortium wouldn’t seek to submit any further bid.

Transurban said in its rejection letter that it “remains willing to explore opportunities for constructive and harmonious relationships with members of the bidding group”.