Supplementary expert opinion gives target shareholders pros and cons of the offer
Asciano is sending its ‘target’s statement’ to shareholders having lodged it to the Australian Securities Exchange (ASX) in relation to the Brookfield consortium off-market takeover offer.
Such a statement is required once takeover proceedings are officially underway and it shows Asciano management staunch in its support for the Brookfield bid.
It warns shareholders that there are “a number of risks” associated with being a minority Asciano shareholder if the offer is rejected.
The statement also notes that shareholders who accept the Brookfield bid will be unable to turn to a superior Qube bid, if one arises.
It restates the findings of its initial independent expert’s finding that Brookfield has the superior offer and backs that with a supplementary independent expert’s report on the Brookfield offer from consultancy Grant Samuel.
Asciano says the latter:
- concluded that the offer is fair and reasonable in the absence of a superior proposal
- concluded it was premature to amend the valuation of Asciano (A$8.42 to A$9.40 per share) although the recent trading performance of the business would suggest that there is potentially some downside risk
- assessed the implied value of the offer consideration to be A$8.93 to A$9.27 per Asciano share, which is within this range.
However, Grant Samuel also says risks with the Brookfield bid including Brookfield’s “different investment profile”, risks of integrating Asciano’s businesses into Brookfield operations, future distributions will not be franked for Australian income tax purposes and the likelihood of incurring capital gains tax.
Brookfield offer changes a month ago that allow for a 50.1 per cent minimum acceptance condition means Brookfield could obtain control of Asciano but with less than 100 per cent of its shares, leaving hold-outs exposed.
Meanwhile, if the Brookfield bid is not accepted and Qube’s offer does not become compelling, the share price is likely to fall.
The statement comes against a backdrop of a continuing Australia Competition and Consumer Commission (ACCC) probe into the bid and the likelihood of Brookfield pledges to offset ACCC concerns affecting Asciano’s value.
While refusing to back the Qube consortium’s bid, the target’s statement confirms it is conducting due diligence on Asciano, which, even if its bid fails, will give Qube an keen understanding of the target.