Freight Rail

Bidding war looms over Asciano

Qube train. Photo: Qube

Qube has announced a formal takeover plan for Asciano.

Asciano, which owns rail business Pacific National, 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 – a smaller Australian logistics business – 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.

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.

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. A new bid has not been ruled out by Brookfield.