Brookfield to Use $6.6 bn Asciano Deal for Regional Growth

Canada's Brookfield Infrastructure Partners on Tuesday said it hopes to use its U.S.$6.6 billion purchase for Australian ports and rail operator Asciano to expand further in the region.

The cash and stock transaction is the Canadian asset manager's largest takeover, adding Asciano's Australian container terminals to Brookfield's hubs in North America and Europe.

Asciano's rail operations also pair well with Brookfield's Australian and Brazilian logistics businesses, according to Brookfield chief executive Sam Pollock.

"There are logical strategic synergies between our respective businesses in Australia, and we will seek to leverage the management expertise of Asciano for our existing businesses globally," he said in a statement.

Brookfield Infrastructure will also seek a listing on the Australian market "as a platform to continue expanding our infrastructure business in this region," Pollock added.

Brookfield itself is investing approximately $2.8 billion to buy Asciano with its institutional partners putting up the rest.

Each Asciano shareholder will receive Aus$6.94 in cash and 0.0387 Brookfield units, for a total value of Aus$9.15 per share. 

This represents a 39 percent premium over Asciano's share price on July 1, the day it disclosed talks with Brookfield. Asciano shares were changing hands at Aus$8.70 in afternoon trade, up 7.2 percent.

Asciano, a major Australian rail, freight and ports operator, said its directors unanimously agreed on the deal as it reported a 41.4 percent rise in full-year net profit to Aus$359.6 million.

"The Asciano board has unanimously concluded that a sale of the company at a significant premium to market value, and on terms that we think reflects fair value, is in the best interests of all shareholders," chairman Malcolm Broomhead said in a statement.

The deal comes amid a flurry of takeovers in Australia's transport sector after a decline in the country's currency and a push by the conservative national government for infrastructure spending.

Japan Post Holdings recently purchased logistics firm Toll Holdings, which has a global network spanning road, air, sea, and rail routes, for more than U.S.$5.0 billion while a consortium led by China Merchants Group acquired Newcastle Port last year.

Pollock said that while Asciano's businesses that transport of coal, iron ore and grains were exposed to the ups and downs of the commodity trade, he had confidence in the purchase.

"While we have some concerns we monitor very closely... we think that the customer base that underlines Asciano's base in particular is very robust," he told reporters in Sydney.

Asciano shareholders are expected to vote in November on the proposal, which is also subject to regulatory approval by Australia's competition and foreign investment watchdogs.