Brookfield Infrastructure's $12 billion acquisition offer receives unanimous support from Asciano directors
Brookfield Infrastructure has announced it has agreed to terms with Asciano, acquiring a majority of the rail and port logistics company for around $12 billion.
The consortium says it received unanimous support from the Asciano directors for the deal, which will see Asciano shareholders receive an implied value of $9.15 per share ($6.94 in cash and $2.21 in Brookfield Infrastructure limited partnership units).
Brookfield will assume a 55 per cent stake in Asciano under the deal, and take on the Australian company’s net debt of approximately $3.1 billion.
The remaining acquisition cost is divided into an acquisition facility of $1.9 billion and the balance of $6.9 billion, funded by Brookfield and its partners.
“This transaction enables us to acquire premier transport infrastructure assets in a geography we know well and establish two leading global platforms, with solid long-term prospects,” Brookfield Infrastructure CEO Sam Pollock says.
“Combining Asciano’s Australian container terminals with our existing assets in North America and Europe provides the foundation for a global container platform.
“In addition, Asciano’s leading above-rail operations, together with our Australian and Brazilian logistics businesses, create a powerful, international rail logistics business.”
Asciano chairman Malcolm Broomhead says the company is “pleased to recommend to our shareholders this compelling transaction,” highlighting the value of its “unique and highly strategic” businesses Pacific National and Patrick.
“The primary focus of the Asciano Board has always been, and continues to be, to act in the best interests of shareholders and maximise shareholder value,” Broomhead says.
“After careful consideration of all the options available to the Company, the Asciano Board has unanimously concluded that a sale of the company at a significant premium to market value, and on terms that we think reflect fair value, is in the best interests of all shareholders.”
The deal is still subject to a number of factors. It must find approval from the court, ACCC, Foreign Investment Review Board, New Zealand Overseas Investment Office, and the current Asciano shareholders, who will meet in mid-November.
Brookfield will seek to be listed on the ASX by mid-December, which it says it already has received in-principal approval for.
Asciano results
Asciano has announced a 41.4 per cent full-year net profit increase to $359.6 million for the 2015 financial year, despite reporting a 3.9 per cent dip in revenue.
The after tax profit was achieved through cuts to infrastructure works reducing the company’s capital spending.
Falling below the company’s forecast range, the expenditure over the 12 month period dropped 24.8 per cent to $566.9 million.
Asciano predicts it to decrease again over the next financial year to between $390-440 million.
The company’s biggest division Pacific National reported a 1.8 per cent decline in total revenue to $2.24 billion but, when adjusted for fuel price reductions and the removal of the carbon tax levy, it increased by 4.3 per cent.
The division’s underlying earnings before interest and tax (EBIT) rose 16.6 per cent to $597 million but suffered from two incidents in the Hunter Valley, a severe weather event and a major derailment.
The terminal and logistics arm’s underlying EBIT (5.1 per cent) and revenue (0.1 per cent) increased in the 2015 financial year, as did its terminal container lift numbers (3.6 per cent).
However, the volume it subcontracted from other parties decreased 92 per cent and its employee numbers dropped 12.2 per cent to 1,664.
The loss of contracts meant the revenue and earnings from the logistics side fell over the 12 months, but benefits from its business improvement program initiatives and a 9.2 per cent increase in EBIT from the container terminals steadied the ship.
Despite a $19.8 million profit from the sale of the Autocare site at Laverton, the bulk and automotive port services’ underlying EBIT fell seven per cent to $83.2 million. Employee numbers also dropped 8.5 per cent over the year.