The battle for Australian stevedoring and rail giant Asciano Ltd (AIO.AX) escalated on Tuesday after ports firm Qube Holdings Ltd (QUB.AX) made a $6.3 billion offer that narrowly beats a rival bid and is expected to draw less concern from antitrust regulators.
Qube, led by Chris Corrigan who ran Asciano’s port unit for 16 years, made an informal cash and scrip offer worth A$9.25 per share, a day after Asciano endorsed a similar bid from Canada’s Brookfield Asset Management (BAMa.TO) worth A$9.22.
The war has seen both Brookfield and Qube dig in their heels by taking one fifth of Asciano each and much will hinge on whether Asciano allows Qube to do due diligence or pursue a buyout that Australia’s competition regulator has already flagged it may block.
The Australian Competition and Consumer Commission (ACCC) has said it could oppose a full Brookfield takeover as the Canadian firm owns the rail tracks Asciano’s freight trains run on.
Qube said in a statement its proposal would not need ACCC backing. Qube, which is about one-third the size of Asciano, has teamed up with Global Infrastructure Partners and Canada Pension Plan Investment Board in its bid and made clear it would take the ports business while its partners would gain the rail freight division.
Asciano Chairman Malcolm Broomhead said in a teleconference he has no preference as to the buyer but added that the likelihood of getting a deal done would be an important factor.
“The board really is focused on one thing and that is that we maximise returns to our shareholders, which … goes to do-ability as well as value. As long as we’re satisfied on do-ability, it’s simply a matter of value,” he said.
Brookfield declined to comment.
Asciano shares climbed as much as 4 percent to A$9.08, a seven-year high, as investors grew more hopeful that the company will be sold.
The regulator is due to rule on Brookfield’s proposal on Dec. 17. Neither Qube nor Brookfield alone can block a friendly takeover as their one-fifth stakes, the most they can buy on the market, are short of the 25 percent required for such a move.
“What it comes down to is whether or not the ACCC is going to see (Brookfield’s) concentration of market share as being too great,” said an analyst at a fund management firm with Asciano shares, who declined to be identified due to the sensitivity of the situation.
But even if the regulator greenlights Brookfield’s offer and Brookfield sweetens its bid, Qube’s Corrigan is not expected to give up easily on a business dear to his heart.
In 2005, Corrigan spent nine months resisting Asciano’s hostile bid for his stevedoring company Patrick, forcing Asciano to raise its offer from A$4 billion to A$5.8 billion before he accepted.
The takeover battle underscores the attraction of Australian companies in a year in which the local currency AUD= has skidded 13 percent and the share market has fallen 6 percent, cutting valuations of firms seen as well regulated and having growth potential.
Asciano, which has rail in every Australian state and stevedoring in 40 locations, has been seen as especially vulnerable because its earnings have been hit by a resources slowdown, but longer-term it is expected to benefit from restructuring aimed at automating ports and cutting costs.