Logistics and ports group, Qube (QUB) and its two foreign partners has put the weights on Asciano (AIO) and its would be merger partner, Brookfield Infrastructure to put up or face a fight by launching an indicative offer to buy Asciano for $9.25 a share.
The bid was made in a letter sent late last week and made public yesterday ahead of the 2015 annual meeting of Asciano in Melbourne.
Asciano confirmed it had received the indicative offerl for its ports and rail business from the Qube consortium, which already owns 19.99%. Qube wants to conduct due diligence on Asciano, for which it needs the latter’s approval.
Asciano chairman Malcolm Broomhead said at the AGM that the company’s board will decide “over the next day or two” whether to grant the Qube consortium due diligence
The board needed to decide whether Qube’s proposal was "doable" before granting the consortium due diligence, given Brookfield owns 19.3% of Asciano, Broomhead said.
If Asciano’s board believes the Qube proposal can be executed, it would consider whether it represents better shareholder value than an earlier offer from Brookfield Infrastructure, Broomhead said.
"We have our own emotional views on who might be the better operators but that doesn’t impact on this decision," he said. "Our focus is on maximising shareholder value."
The market has its own view and after bidding Asciano shares up to a seven year high of $9.08. the shares eased back to $8.99, still up 2.9%. Meanwhile Qube shares fell more than 3% to $2.18.
QUB vs AIO – Qube opens up bidding war for Asciano
The Qube consortium is offering $6.94 in cash (75% of the $9.25 a share offer) and the remainder in Qube, saying it represented “superior value” to Brookfield Infrastructure’s earlier takeover offer.
Brookfield on Monday made a formal takeover proposal direct to Asciano shareholders offering $6.94 in cash and 0.0387 of a Brookfield unit, which currently values the offer at $9.22.
The Qube consortium said its offer was an expression of interest in the ports and rail group, and was not a legally binding offer.
It said it would consider a range of options to implement the proposed transaction, including a scheme of arrangement, a takeover offer or "asset sale and selective capital reduction."
It asked Asciano to fulfil its fiduciary duties and allow the consortium to do due diligence so its proposal can be "progressed" to a binding offer. The consortium said it could complete due diligence by mid-December.
"The proposal represents superior value to the conditional scheme of arrangement and conditional proposed takeover offer announced by Brookfield Infrastructure Partners, particularly given the ‘red light’ issues announced by the Australian Competition and Consumer Commission (ACCC)" on October 15, the consortium said.
The consortium, which says it can minimise regulatory hurdles, said the ACCC’s concerns with Brookfield’s proposal created "significant risk" that the Brookfield proposal would not be able to proceed in its current form.
The consortium argued its proposal benefited Asciano shareholders because they would not be exposed to the "significant risks associated with Brookfield’s business and operations."
"The Brookfield proposal involves Asciano shareholders receiving relatively illiquid securities with a materially different risk profile, governance and management structure to their current investment in Asciano, and without the opportunity to directly share in the synergies likely to flow from the consortium’s proposal, as well as access to franking credits in the future."
The consortium said its cash-and-stock proposal would allow shareholders to retain exposure to Asciano’s container terminal business, "including the upside potentially available from Asciano’s container terminal businesses being combined with Qube."
"The Consortium notes the current plan, in respect of the Brookfield proposal, to distribute Asciano’s franking credits to shareholders and confirms it would be comfortable with a similar arrangement that could be developed in consultation with Asciano,” the Qube group said.
"Through the receipt of Qube shares within the Proposed Transaction, Asciano shareholders will be able to retain an exposure to Asciano’s container terminal businesses, including the upside available from Asciano’s container terminal businesses being combined with Qube and operated by Australia’s most successful port logistics management team.”
Brookfield Infrastructure’s offer is conditional on at least 50.1% of Asciano’s shares being voted in favour. The Qube consortium’s proposal did not include a minimum acceptance condition.
