AusRAIL, Market Sectors

Tranz Rail target of surprise takeover bid

<p>RailAmerica has launched a surprise takeover bid for cash-strapped New Zealand operator Tranz Rail.</p> <p>The share price for Tranz Rail soared this morning (Thursday, May 15) on the New Zealand Stock Exchange, up more than NZ20 cents from yesterday’s closing price of NZ52 cents.</p> <p>RailAmerica, which also owns Melbourne-based Freight Australia, is the world’s largest short-line and regional rail road operator.</p> <p>The company is offering NZ75 cents a share, representing a total share offer of NZ$156m, and is offering to assume existing lease obligations and debts of NZ$234m.</p> <p>RailAmerica CEO Gary O Marino said the potential acquisition represents a "significant opportunity for shareholders".</p> <p>"As we have done in previous acquisitions, including our acquisition of Freight Australia, we believe we can significantly improve customer service by implementing our customer-driven principles," Mr Marino said.</p> <p>Tranz Rail has responded that it will consider the offer and will seek "external valuation and advice".</p> <p>The NZ75 cent offer is significantly better than Tranz Rail’s price over the last quarter, but is a long way from the heady NZ$3.62 price the operator’s share commanded last year.</p> <p>Analysts in the New Zealand media have already described the offer as undervalued and opportunistic, and speculate that offers between NZ$1.25 and NZ$2 would be a more realistic assessment of the company’s worth.</p> <p>The surprise offer comes at a time when the New Zealand Government and Tranz Rail are in the midst of ongoing talks about track ownership.</p> <p>Tranz Rail is also in the process of divesting itself of its trucking arm and is looking to offload the Wellington Metro services.</p> <p>The offer will start on May 30 and close on June 14, and is conditional on getting 90% acceptance. </p> <br />