Bidding war of Australian rail and port giant ends, rivals make joint-venture

The long-running bidding war for Asciano Ltd has ended after Qube Holdings Ltd announced a joint 9.1 billion Australian dollar (6.81 billion U.S. dollar) bid with Canada's Brookfield Asset Management Inc. for the Australia's largest rail and port operator.

Qube, in a statement to the ASX on Tuesday, said it has terminated its stand-alone bid with its consortium partners, instead acquiring Asciano's Patrick Container Terminals business in a joint venture with Brookfield. Qube will take a 50 percent equity stake in the operation with the remainder shared between Brookfield and its co-investors including Qatar Investment Authority.

China Investment Corp, the Canada Pension Plan Investment Board, British Columbia Investment Management Corp and U.S-based Global Infrastructure Partners would acquire Asciano's rail freight operation Pacific National.

Brookfield will take on the Bulk & Automotive Ports Services Business and Asciano's 50 percent stake in the Asciano-Qube joint venture Australian Amalgamated Terminals (AAT). However, pending clearance form Australia's competition watchdog, Qube has the option to acquire the AAT stake, or nominate a third party.

"The acquisition creates significant opportunities for productivity improvement and innovation across the Australian container terminal, logistics and transportation sectors, delivering substantial value for Qube shareholders as well as the broader logistics chain," Qube managing director Maurice James said in a statement.

The Qube consortium and Brookfield had been in a long-running bidding war for the Australian rail and port giant which saw Qube take the upper hand with a 9.05 billion Australian dollar (6.77 billion U.S. dollar) bid, forcing Asciano to change its shareholder recommendation from Brookfield.

However late February, Qube said it wanted to end the bidding war and create a joint proposal for Asciano after it expected Brookfield would revise its offer following the end of the matching rights offer when it was able to add new partners into the consortium.

Asciano, at the time, said while it would entertain the joint proposal, it would still recommend the Qube bid to shareholders until a confirmed offer was obtained.

The joint venture and breakup have been seen as way to alleviate concerns raised by the Australian Competition and Consumer Commission (ACCC), which extended its final decision date on the two original competing bids to March 24. The new proposal will still require ACCC clearance.

Australia's Foreign Investment Review Board is also reviewing the takeover against other infrastructure buyouts by foreign companies.

Asciano's shares will attract 9.15 Australian dollars (6.84 U.S. dollars) per share in cash once the interim dividend of 13 Australian cents (9.73 U.S. cents) per share - announced on Feb. 24 - is taken out. Asciano's shares closed at 8.87 Australian dollars (6.64 U.S. dollars) on Monday. Endit