The Australian logistics infrastructure provider Asciano has received a take-over bid from Brookfield Infrastructure Group, a specialist logistics investment company based in Canada that already owns a string of global assets including Dalrymple Bay coal terminal in Australia.
The value of the Brookfield bid is AUS$8.8bn (US$6.7bn/€6bn), although both the bid and price are described by Asciano’s management as a “confidential, indicative, non-binding and conditional proposal”. It was received on June 26 but Asciano only revealed this on Tuesday (July 1), partly due to apparent leaks to the press.
The senior management of Asciano are being cautious about the deal, commenting that there is “no certainty that the proposal will result in an offer for the company, what the terms of any offer would be, or whether there will be a recommendation by the Board of Asciano”. Despite this Brookfield’s offer is 36% higher than Asciano’s share price on the Australian stock exchange at closing on Tuesday (July 1).
If the deal does go through it would be one of the largest purchases of an Australian company, larger even than the purchase of Toll Holdings by Japan Post several months ago for AUS$6.5bn.
Asciano’s business is heavily focused on bulk infrastructure for coal and other commodities, such as iron ore and agricultural products. It operates a string of major maritime terminals as well as the Pacific National rail network which is the leading long-haul rail freight provider in the country. These assets have provided considerable growth in the recent past as the commodity sector boomed on demand from China. However the subsequent slowing of the Chinese economy has depressed this market over the past two years. Yet Asciano has continued to expand its already substantial container terminal business driven by the strength of the Australian economy, which has grown at over 3% a year for the past several decades.
Asciano was carved out of Toll Holdings in 2007, creating two distinct businesses with Asciano focused on fixed assets and Toll’s more asset light approach. Both were the result of a highly acquisitive strategy by Toll which included the purchase of Patrick Corporation, Australia’s leading port company and National Railways, one of its largest rail freight businesses.