Port and infrastructure operator Asciano Limited (ASX:AIO) confirmed the receipt of a confidential, indicative , non-binding and conditional proposal from Brookfield Infrastructure Group to acquire Asciano at an implied value of $9.05 per share.
The company has submitted the announcement to the ASX this morning and requested a trading halt until 11:40am (AEST). Shares of Asciano were trading at $6.65 prior to the trading halt and are expected to gain significantly as soon as trading recommences.
The Board of Asciano has decided to engage further with Brookfield exclusively as it believes it is in the best interest of shareholders. A comprehensive due diligence has been granted, which will help to understand if the offer values Asciano at a fair price.
A combination of cash and units in one of Brookfield’s listed infrastructure funds results in an implied value of $9.05 per share. The offer values Asciano at a 36% premium to the current market price. The takeover offer from the Canadian firm values the Australian company at just under A$9bn.
Asciano has outperformed the broader ASX 200 index in the past 12 months. AIO has gained 17% in the past 12 months and is up almost 10% year to date. The gains come to no surprise as Asciano achieved solid EBITY growth and targets FY15 underlying EBIT to be higher than the 5% growth achieved in FY14. Managing Director and CEO John Mullen said earlier this year that Asciano “will continue to pursue opportunities to generate value through strategic acquisitions, joint ventures and divestments across all Divisions.” Whilst he may not have thought to receive a takeover bid within a few months, the board will not have to assess all aspects of the offer.
Shareholders should be happy about the offer as a share price of $9 would have probably not been reached in the next 12 months.
Author: Simon Herrmann
Jul 01, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.