Frustrated Brookfield preparing all-cash bid

Brookfield looks to be readying a higher, all-cash offer for Australian port and rail firm Asciano, after takeover rival Qube earned the support of Asciano’s board by upping its own offer this week.

Brookfield Infrastructure Group chief executive Sam Pollock expressed his frustration to Asciano chairman Malcolm Broomhead on Sunday, February 7, over Qube’s bid and how it may have influenced the Australian Competition and Consumer Commission’s decision to delay its ruling on the competing takeover offers.

The ACCC appears to want to rule on both the Qube and Brookfield proposals at the same time.

But the formal structure of Qube’s bid was not finalised until last fortnight, leading the ACCC to push back its ruling from February to March.

In delaying the ruling, ACCC boss Rod Sims said last week the commission “requires time to consult on Qube’s transaction structure, given we have only had the details of the structure for a very short period.”

But he also said there were some other aspects of the Brookfield bid which had also led to the delay – specifically, the need for further scrutiny of the Canadian fund’s ownership of WA rail owner Brookfield Rail, and the Dalrymple Bay Coal Terminal in Queensland.

“We need to consult further with market participants about [Brookfield’s] proposed divestment of Asciano’s Pacific National intermodal rail operations, other vertical integration issues in Western Australia, and undertaking commitments in relation to the Dalrymple Bay Coal Terminal, and then give Brookfield an opportunity to respond,” Sims explained.

Pollock isn’t buying it, however; he thinks Qube is to blame for delays at the ACCC.

“We expect that you are as frustrated as us by the ACCC delaying its decision this week,” Pollock wrote in a private letter to Broomhead on Sunday.

“While [the ACCC’s] need for time to scrutinise Qube’s proposal is not surprising, given that it was disclosed only on January 28th, we are unable to understand the need for delay on our transaction and will be seeking to work through and address any issues with the Commission as quickly as possible.”

Pollock wrote the Brookfield board is preparing to offer an all-cash bid of $9.28 per Asciano share, higher than Qube’s revised bid – made over the weekend – of $9.24 per share.

He also confirmed Brookfield would commit to “an upfront disposition of the intermodal business on pre-arranged terms”.

A revised bid from the Brookfield consortium would likely come in the ‘match’ period following Qube’s offer, which Asciano has extended to Brookfield until February 15.

The Asciano board’s shock switch this week marked the end of its unwavering support for the Brookfield bid. The board made a point of maintaining its support for Brookfield’s offer, even throughout Qube’s early approaches.

But Monday’s announcement from Asciano changed all that.

“Following detailed consideration, the Asciano Board has determined that the Qube Consortium Proposal is a superior proposal for the purposes of the Brookfield Bid Implementation Deed,” Asciano announced.

“Brookfield Infrastructure now has the right, but not the obligation, to submit within 5 business days a matching or superior proposal for the Asciano Board.”

Qube is joined in its bid by a trio of funds: Global Infrastructure Partners, Canada Pension Plan Investment Board and Chinese fund CIC Capital Corporation.