Counter-offer of 6.7 per cent more than Brookfield comes as CIC backs Australian bidder
With three weeks to go before regulatory authorities rule on Brookfield’s Asciano takeover, details of Qube’s bid for the same target have emerged.
Chinese public investor CIC Capital has joined Qube’s North American partners, Global Infrastructure Management LLC (GIP) and Canada Pension Plan Investment Board (CPPIB), to offer $6.97 in cash and one Qube share for every Asciano share, as the bidding war gains pace.
The bid values Asciano’s shares at $9.07, up 6.7 per cent on Asciano’s share value yesterday of $8.77, which reflects roughly Brookfield’s bid last month.
The Qube consortium’s proposal would enable:
Qube to acquire Asciano’s Patrick container terminal business and 50 per cent interest in Australian Amalgamated Terminals (AAT), referred to collectively as Ports
GIP, CPPIB and CIC Capital to acquire the rail business of Asciano by acquiring Asciano shares, through a jointly-owned bid entity called BidCo
the remaining Bulk, Auto and Ports Services businesses and 50 per cent interest in ACFS Port Logistics , referred to collectively as BAP, to be sold to an entity to be established and owned by GIP, CPPIB and CIC Capital initially, in an entity called BAPS HoldCo, with the intention that the BAPS assets be ultimately sold to a third party.
Qube may subsequently seek to acquire certain BAPS assets, subject to regulatory approval.
Along with the premium, Qube is dangling greater future returns from such a deal, particularly the ports businesses centred on stevedore Patrick.
“Qube believes that combining Ports with Qube under a single ownership and management structure will generate an estimated A$30-50 million per annum of benefits from synergies and business improvement projects over two to three years, producing double digit EPS [earnings per share] accretion3 to Qube on an FY15 pro forma basis,” it says.
“Qube believes there is potential for substantial additional value creation from longer term supply chain efficiencies.”
The cost to Qube itself will be $2.65 billion before costs of which at least $1.80 billion will be equity funded, with the balance funded through new debt.
Asciano’s consistent line has been that its board support the Brookfield bid unless a better offer arrives, and the Qube consortium wants a board response by February 5.
“We know Asciano’s Ports businesses better than any other potential owner,” Qube MD Maurice James says.
“The ports are a core element for Qube to provide customers seamless coverage through Australia’s international trade supply chain.
“The acquisition of Asciano’s Ports businesses would provide significant opportunities to create substantial shareholder value, both through improving the operations of the Ports businesses and through the benefits of combining the businesses with Qube’s assets.”
“Having delivered significant returns to shareholders since listing, Qube sees the acquisition of Asciano’s Ports businesses as the natural next step in its growth story.”
The Australian Competition and consumer Commission (ACCC) is due to decide on both takeover deals on February 18.