As­ciano soar­ing on $ 9b takeover of­fer

Townsville Bulletin - - NEWS - GREG ROBERTS

AUS­TRALIA’S largest rail and freight op­er­a­tor As­ciano is set to fall into for­eign hands af­ter North Amer­i­can gi­ant Brook­field lobbed a near $ 9 bil­lion takeover of­fer its way.

It would be the big­gest takeover in Aus­tralia since SABMiller swal­lowed bev­er­ages gi­ant Foster’s for $ 12.3 bil­lion in 2011.

Brook­field’s in­ter­est in a mi­nor­ity stake in As­ciano’s Pa­trick ports and steve­dor­ing busi­ness was al­ready known, but yesterday’s com­plete take- over of­fer was a shock.

In­vestors re­acted pos­i­tively, send­ing As­ciano’s stock up more than 20 per cent dur­ing the day be­fore clos­ing $ 1.12, or 16.8 per cent, higher at $ 7.77.

That is be­low Brook­field’s cash and scrip of­fer, which is in­dica­tive, non- bind­ing and con­di­tional and val­ues As­ciano shares at $ 9.05 and the com­pany at nearly $ 8.8 bil­lion.

If it went ahead, it would only need 50 per cent sup­port from share­hold­ers.

Brook­field, a Cana­di­an­based US- listed in­fra­struc­ture gi­ant with $ 200 bil­lion in as­sets un­der man­age­ment, would get ac­cess to half of Aus­tralia’s con­tainer freight and rail freight net­work through an As­ciano takeover.

As­ciano said in a state­ment that it would en­gage with Brook­field as the lat­ter com­pleted due dili­gence.

Brook­field, which owns con­struc­tion group Mul­ti­plex in Aus­tralia, would only say that talks were on­go­ing.

For As­ciano the of­fer, at a 36 per cent pre­mium to Tues­day’s clos­ing shareprice, is at­trac­tive, said IG mar­ket strate­gist Evan Lu­cas.

“It prob­a­bly does them a world of good; they have been strug­gling and look­ing to get out of Pa­trick any­way. It has not been ad­van­ta­geous,” he said.

One neg­a­tive for re­tail share­hold­ers that might be hold­ing back the shareprice, said Mr Lu­cas, was the scrip com­po­nent, which meant “mum and dad” in­vestors would have to sell Brook­field’s for­eign shares to get cash, which can be slow.

Pa­trick is prof­itable but has a long history of in­dus­trial strife, from the re­cent auto- ma­tion of the Port Botany con­tainer ter­mi­nal to the bit­ter 1998 wa­ter­front dis­pute in Syd­ney and Mel­bourne.

As­ciano is of­ten de­scribed as an eco­nomic barom­e­ter, given the wide range of prod­ucts it trans­ports.

Any takeover deal would re­quire For­eign In­vest­ment Re­view Board ap­proval, with As­ciano’s port and rail busi­nesses strate­gi­cally im­por­tant.

Chief ex­ec­u­tive John Mullen said in Fe­bru­ary that Aus­tralia’s eco­nomic malaise was mak­ing it dif­fi­cult to grow earn­ings.

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