Asciano chief executive John Mullen. Photo: Greg Dickins
Australian port and rail giant Asciano will pay an $88 million break fee to back out of a takeover bid from Canadian infrastructure fund Brookfield, so it can fully support a rival bid from Qube Holdings.
Asciano had recommended Brookfield’s bid over Qube’s counter-offer for several months. But it shifted its stance last week, saying an increased bid from Qube was superior to the Brookfield offer.
Brookfield was given until this week to match or better Qube’s renewed offer. The Canadian firm appeared to be readying a new bid last week, but Asciano said on Tuesday that no such bid was received before the Monday deadline.
As a result, Asciano’s board is now recommending its shareholders accept the takeover offer from the consortium led by Qube Holdings.
“The Brookfield Bid will now be terminated and the Brookfield takeover bid is expected to lapse at 7.00pm on 18 February 2016,” Asciano said on Tuesday.
“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.”
With Qube now the clear front-runner in the long-running battle for Asciano, managing director Maurice James said he was pleased with the board’s decision.
“We look forward to working with Asciano to complete this transaction,” James concluded.
Qube is partnered in its bid by Global Infrastructure Partners, the Canadian Pension Plan Investment Board, and China Infrastructure Corporation (CIC) Capital.
The ASX-listed transport and logistics firm plans to acquire Asciano’s container terminal business, Patrick, as well as Asciano’s share of the Asciano/Qube joint venture Australian Amalgamated Terminals (in effect giving Qube full control of AAT).
Qube’s trio of financial partners would take control of Asciano’s rail subsidiary, Pacific National.
Asciano’s remaining Bulk, Auto and Ports Services businesses, and 50% share in ACFS Port Logistics, would be amalgamated into a separate entity which would also be owned by the three financial partners in the takeover bid. Qube may subsequently seek to acquire various assets within the new business, subject to regulatory approval.
Qube, which is led by former Patrick container terminals boss Chris Corrigan, believes combining Asciano’s container ports business with its own port assets and businesses will be a massive benefit to all shareholders.
Both Qube’s and Brookfield’s offers are still under review by the Australian Consumer and Competition Commission. The ACCC this month suspended its verdict on the two rival bids to March.