Brookfield gets $88m after doing nothing

Lack of counter bid to Qube offer means original bidder gets break fee cash

Brookfield gets $88m after doing nothing
Asciano has now backed Qube's bid officially.


Asciano takeover suitor Brookfield will pocket an $88 million break fee after being unable to top a better offer from Qube in time.

The break fee was triggered when the Asciano board dropped its Brookfield recommendation in favour of Qube’s more recent bid, as it was obliged legally to do in protecting its shareholders’ interests.  

While it looks like money for nothing, break fees increase certainty about the process and relates to an exclusivity agreement that kept Asciano from soliciting higher bids after having agreed to the Brookfield’s approach.

Meanwhile, Asciano shareholders may feel less aggrieved at the payout given the bidding war has seen the value of their shareholdings rise from $6.47 to $8.87 in the past six months and will stay that way until the deal is done and they sell out.

That move came following due warning eight days ago that this was what would happen in the absence of a better bid.

"The Brookfield BID will now be terminated and the Brookfield takeover bid is expected to lapse at 7.00pm on 18 February 2016," Asciano tells the stock market.

"Asciano will also apply to the court for orders to cancel the Scheme Meeting in respect of the Brookfield Offer.

'As a result of the change in recommendation in favour of the Qube Consortium Proposal, a break fee of A$88 million will be paid to Brookfield Infrastructure.

"Asciano will treat the break fee as a material item of A$88 million pre tax (A$61.6 million after tax) in its FY16 full year financial results."

Despite that, there are reports a better Brookfield deal is being constructed, though whether new offers will include further break fees is unclear.

Qube also has a similar bid implementation deal covering the costs of its bid if it fails.

The board repeated its advice for shareholders to wait for further developments, noting the "Qube Consortium expects to release a Bidder’s Statement and Asciano expects to release a Target’s Statement and Notice of Meeting containing further details and information regarding the takeover offer" and the sale Australian Amalgamated Terminals and the Bulk & Automotive Port Services businesses and a 50 per cent interest in ACFS Port Logistics that Qube proposes.

"We are pleased that the Asciano Board has entered into the Bid Implementation Deed and sale agreements and recommended the Qube Consortium’s Proposed Transaction, and we look forward to working with Asciano to complete this transaction," Qube MD Maurice James says.

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