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Brookfield wooing Asciano shareholders

Brookfield wooing Asciano credit Shutterstock

Bermuda-based group Brookfield is holding a series of briefings this week, looking to win over the voting shareholders of Australian logistics firm Asciano, which agreed to a $12 billion takeover offer in August.

Brookfield, which owns WA’s Brookfield Rail, agreed to terms with Asciano – owner of rail business Pacific National and ports business Patrick – after the Bermuda group lobbed a $9.05 per share offer on July 1.

A month after that bid, Asciano’s board announced it had agreed to a cash and scrip offer worth $9.15 a share – 10c more than the initial bid. The board encouraged its shareholders to study the deal, and recommended they accept in due course.

As part of that process, Brookfield representatives are in the country this week to meet with Asciano shareholders.

AFR’s Street Talk suggests wooing is needed for some Asciano investors, who are nervous about Brookfield’s external management model.

Street Talk suggests the group will compare its recent returns with those of other infrastructure companies such as Sydney Airport, Qube Holdings, Transurban and major Pacific National competitor, Aurizon.

Under the terms of the deal, which must also be approved by regulatory authorities, 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.

Asciano said in August it expects to pay a fully franked special dividend of up to $0.90 per Asciano share if the transaction proceeds, in which case the cash value of the Brookfield offer will reduce by that amount. This measure, Asciano said, will potentially provide an additional benefit of up to $0.39 per Asciano share “for shareholders who can capture the full benefit of the franking credits”.

Grain bodies last week lobbied the Australian Competition and Consumer Commission to block the deal.

WA Farmers Federation was quoted in several sources: “WA Farmers urges the ACCC to deny the proposed acquisition, as the monopolistic nature of the infrastructure involved will lead to anti-competitive behaviour in the already turbulent rail freight network in WA.”

WA Farmers believes that if Brookfield – already the major operator in WA – buys the owner of Pacific National – a major national competitor – the users of rail infrastructure will suffer.

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