Logistics, Ports & Terminals

Asciano board pondering Qube offer

Qube train. Photo: Qube

The board of port and rail group Asciano is considering whether to allow Qube to perform due diligence as part of a formal takeover plan announced this week.

Asciano, which owns rail business Pacific National and ports business Patrick, confirmed the news on Tuesday morning, ahead of its annual meeting in Melbourne.

The ASX-listed logistics firm, which also owns national stevedoring business Patrick, has been the target of a takeover offer from Canada/Bermuda-based firm Brookfield Infrastructure Partners since at least July.

The sides had appeared to be nearing a deal, with Asciano’s board recommending an offer to shareholders in August, and Brookfield undertaking the process of winning them over ahead of a formal vote.

But late in October, Qube made waves by teaming up with a pair of North American funds to acquire 19.99% of Asciano. Qube at that time announced it planned to block Brookfield’s bid, and wanted to acquire parts of, or all of Asciano’s businesses.

Brookfield responded earlier this week by upping its existing scheme of arrangement plan with a takeover bid worth $9.22 per share in cash and scrip value. It also bought shares and took an equity swap, giving it a 19.3% ownership stake of its own.

On Tuesday Qube fired back, announcing a $9.25 per share cash and scrip offer of its own. “The proposal represents superior value to the conditional scheme of arrangement and conditional proposed takeover offer announced by Brookfield Infrastructure Partners,” Qube argued, “particularly given the ‘red light’ issues announced by the Australian Competition and Consumer Commission (ACCC) on 15 October 2015.”

The ACCC, which has to approve of takeover and merger offers on competition grounds, has delayed its decision on Brookfield’s proposed takeover move, because of concerns raised by a number of existing Asciano and Brookfield customers.

A new bid has not been ruled out by Brookfield.

Brookfield owns Brookfield Rail, which owns roughly 5,000km of rail infrastructure in WA through a long term lease with the state government. Brookfield also owns a controlling stake in the Dalrymple Bay Coal Terminal in Queensland.

For what it’s worth, the ACCC will also keep an eye on Qube if it is to acquire any or all of Asciano, but it is considered by many to be less at risk of being blocked entirely from making an acquisition.

Asciano’s board is now considering whether to engage Qube’s offer, but says it will continue to recommend Brookfield’s bid to shareholders.  The board would have to open up the company’s books for Qube to do due diligence, if the Qube offer were to go ahead.

Before it does that, Asciano chairman Malcolm Broomhead said on Tuesday the board wants to establish the “doability” of the Qube offer.

“A bid has to be capable of acceptance,” he said yesterday.

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