Australia’s competition watchdog is due to announce its decision on the controversial takeover proposal of Asciano by Brookfield on Thursday, October 15.
Australian Competition and Consumer Commission chairman Rod Sims spoke in Brisbane this week about the many current merger assessments facing the independent authority.
Along with the controversial Asciano takeover, the ACCC is in the process of assessing proposed acquisition and merger deals between Royal Dutch Shell and BG Group, Coles and Supabarn, Foxtel and Ten Network Holdings, and Haliburton and Baker Hughes.
“The ACCC has an unprecedented number of complex merger assessments before it,” Sims explained.
“These are all transactions of significant importance to the Australian economy and it is therefore important that they are assessed carefully and correctly.”
It’s unclear whether Thursday’s decision on the Asciano/Brookfield deal will be as simple as a ‘yes’ or ‘no’. The watchdog said on Monday: “That decision may either be a final decision or the release of a Statement of Issues.”
The board of Asciano in August agreed to terms with Brookfield, recommending the sale for the approval of shareholders.
ACCC approval is one of several steps Brookfield and Asciano will have to meet before a proposed takeover can formally take place.
Concerns have been raised to the ACCC about whether Brookfield – which owns WA rail operator Brookfield Rail, and a stake in the Dalrymple Bay Coal Terminal in Queensland – should be allowed to combine with Asciano – which owns rail business Pacific National and ports group Patrick.
Grain Producers Australia became the latest public opponent of the acquisition this week, with chairman Andrew Weidemann saying the regulatory environment was not sound enough to prevent damaging consequences.
“The regulatory environment is clearly inadequate,” he began.
“The grain industry is losing value and this appalling situation can only reduce public support for foreign investment, at a time when Australia needs to encourage investment and grow economic activity.
“We saw a similar situation to this in Victoria some years ago, when the rail freight network was privatised and the result was that the network fell into disrepair, rail services became uncompetitive and much grain was forced onto road, with the eventual result that the Victorian Government had to resume ownership.
“Without appropriate regulation and a national structure for management of access to key infrastructure like rail we are forced into being a price taker with little negotiating power, so the Brookfield proposal for Asciano should be accompanied by the Australian Government defining a far better regulatory regime,” Weidemann said.
Wiedemann proposes appointing a specialist agricultural commissioner to the ACCC, along with a team of support staff in the new Agricultural Enforcement and Engagement Unit.
“With this group in place to ensure ongoing oversight of Brookfield and stronger regulation to work with, we might see much better balance for future investment.
“The Australian grain industry needs ongoing investment in supply chain infrastructure and it should be encouraged, but it must also occur within a healthier regulatory environment than we see today.
The terms agreed between Asciano and Brookfield are based on a per-share valuation of $9.15 – 10c more than the initial offer announced on July 1.
Under the terms of the deal, Asciano will be acquired by a consortium led by Brookfield Infrastructure Partners, for an “implied value” of $9.15 a share, valuing the Australian logistics and infrastructure business at approximately $12 billion.
Asciano shareholders will receive $6.94 in cash, and 0.0387 Brookfield Infrastructure shares, for every Asciano share they own. Each 0.0387 Brookfield Infrastructure share has an implied value of $2.21.
Brookfield Infrastructure will seek an ASX listing concurrent with the transaction.