Australian toll road operator Transurban is trying to calm investors spooked by the Ontario Teachers’ Pension Plan’s (OTPP) recent sale of its stake in Transurban, after the firm rejected a takeover bid from OTPP and two other major shareholders.
The sell-off – along with the recent acquisition of Sydney’s Lane Cove Tunnel for A$630 million (€446 million; $566 million) – has sent Transurban’s share price plunging by over 10 percent to about the A$4.40 per share mark. Transurban had been trading at above A$5 per share before this month’s events.
In a bid to reverse the decline, Transurban’s board of directors has sent a letter to its shareholders in which it says that it “believes that the Transurban Group is in the best shape it has ever been”. In it, chairman David Ryan again reiterates that the board gave serious consideration to the latest offers from OTPP, the Canada Pension Plan Investment Board (CPPIB) and Australian investor CP2 but ultimately rejected them because “neither proposal offered sufficient value or certainty”.
On May 11, CPPIB, OTTP and CP2 offered Transurban A$5.57 cash per security or A$7.2 billion, but required the toll road operator to cease its A$542 million capital raising to fund the acquisition of Lane Cove Tunnel and capex for the firm’s M2 and M5 roads, also in Sydney.
The following day, the investors came back with a second proposal that would see them pay a lower price of A$5.42 per share but would allow Transurban to continue with the capital raising. The bidders said they would require additional funding for this second offer, which they had yet to secure.
Following the rejection of both proposals, OTPP divested its 12 to 14 percent stake in Transurban for a reported A$710 million.
“We have a first class suite of assets that is among the best in our sector globally, we have an attractive pipeline of growth projects at various stages of delivery and we have a healthy balance sheet that provides significant funding certainty in relation to our growth projects. We did not believe that the premium being offered to acquire Transurban under the proposals was sufficient to compensate security holders for this value inherent in the Group,” Ryan observed.