Asciano Bidding Saga Ends With $6.7 Billion Offer

SYDNEY—Canada's Brookfield Infrastructure Partners LP has teamed up with Australia's Qube Holdings Ltd. and several global funds to acquire rail-and-port operator Asciano Ltd. in a deal worth 8.92 billion Australian dollars (US$6.71 billion), putting an end to a long bidding war.

Australian infrastructure assets have been fiercely coveted by global investors because they are perceived to offer stable long-term returns. Recent deals have included power grids and commodity ports.

In addition, Australian port infrastructure has been attracting particular interest from investors eager to exploit the world's sharpening focus on building transport networks to facilitate trade.

Brookfield Infrastructure began its pursuit of Asciano in late June. Four months later, a group led by Qube Holdings signaled it was considering a rival bid, saying that a tie-up between Asciano's and its ports businesses would improve the Australian transportation market.

On Tuesday, the pair said they and their partners—a group of specialist infrastructure, pension and sovereign-wealth funds, including from Qatar and China—agreed on a joint binding cash offer for Asciano worth A$9.15 a share. Asciano shareholders will also get a previously declared dividend of A$0.13.

Directors at Asciano—which handles nearly half of all container traffic entering or leaving Australia—have recommended that shareholders accept the deal.

"I believe the agreement we have now reached represents the most common sense resolution to the ownership of Asciano and delivers the best result for all stakeholders," said Maurice James, Qube's managing director, in a statement.

According to the agreement, Asciano's main business units will be broken up. A group of investors, including a unit of China Investment Corp. and Singapore's GIC Private Ltd., will own the Pacific National rail business that hauls freight—including coal—to port for export.

Qube, Brookfield and investors including the Qatar Investment Authority will create a joint venture to buy Asciano's Patrick container terminals business, which runs ports in cities including Sydney and Melbourne and is the largest handler of container cargo entering or leaving the country, for A$2.92 billion. Brookfield and its co-investors will buy Asciano's bulk and automotive ports services business, which transports everything from cars to grain, for A$925 million.

In recent months, Qube and Brookfield Infrastructure made competing bids to buy Asciano. Both groups purchased large bundles of Asciano stock. Last month, Qube and Brookfield said they were considering jointly buying Asciano and planned to break the company up.

The partners expect to seek shareholder approval at a meeting in June. The partners have already "had extensive engagement" with the Australian Competition and Consumer Commission, the country's competition regulator, on their past individual proposals "and the likely areas of ACCC interest are well understood," Qube said.

Brookfield faced antitrust challenges when it was considering a lone bid: The Australian regulator raised concerns that a proposed takeover by the company, which operates another rail network here, could hurt competition for rail services in some of the country's main resource-production hubs.

On Tuesday, Brookfield Infrastructure said the joint bid was "clearly superior to any previous offer" and would be beneficial to its own operations.

"With this new transaction, we will globalize our container terminal business, and expect to have opportunities for further optimization given Qube's expertise in the Australian logistics industry and its history with these assets," Brookfield Infrastructure Chief Executive Sam Pollock said.

The Brookfield Infrastructure-led investor group includes British Columbia Investment Management Corp., Qatar Investment Authority and GIC Private.

The group led by Qube—which has a market value of about A$2.4 billion—includes Global Infrastructure Partners LLC, Canada Pension Plan Investment Board and China Investment Corp.

Last year, China's Landbridge Group bought a long-term lease in the Port of Darwin in Australia's north, saying it intended to increase two-way trade between Australia and Asia. A year earlier, China Merchants Group teamed up with Australian fund-manager Hastings Funds Management to buy the lease on the Port of Newcastle in New South Wales state, the world's biggest coal export terminal.

Write to Rhiannon Hoyle at [e-mail]

(END) Dow Jones Newswires

March 15, 2016 00:35 ET (04:35 GMT)

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