Brookfield buys Australian freight firm Asciano for $6.6 billion

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Brookfield Infrastructure has announced an agreement to buy Australian rail and port company Asciano for $.6.6 billion, the latest deal in the logistics industry’s recent mergers and acquisition boom.

The transaction is the Canadian asset manager's largest takeover, adding Asciano's Australian container terminals with 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 management. Brookfield itself is investing approximately $2.8 billion to buy Asciano. Its institutional partners are investing the remaining amount.

Sam Pollock, Chief Executive Officer of Brookfield Infrastructure, said: “This transaction enables us to acquire premier transport infrastructure assets in a geography we know well and establish two leading global platforms, with solid long-term prospects.

“Combining Asciano’s Australian container terminals with our existing assets in North America and Europe provides the foundation for a global container platform. In addition, Asciano’s leading above-rail operations, together with our Australian and Brazilian logistics businesses, create a powerful, international rail logistics business.”

Investment Highlights
 

• Brookfield Infrastructure to invest US$2.8 billion for an approximate 55% stake
• Transaction will establish a leading global rail, port and logistics business
• Fully funded transaction expected to deliver accretive FFO and AFFO per unit; preserving balance sheet strength; and
• Brookfield Infrastructure has received in-principle approval for a listing of its units on the ASX Limited, Australia’s securities exchange (“ASX”).

The combination of Brookfield Infrastructure and Asciano will create a leading global rail, port and logistics business. Asciano’s business is comprised of a unique network of port and rail assets in Australia that include: container terminal operations in major Australian cities including Sydney, Melbourne, Brisbane and Perth that have a capacity of approximately 4.9 million TEUs; port, terminal and supply chain services that support shipping lines, importers, exporters, freight forwarders and customs brokers; andnationwide above rail haulage operations with assets consisting of 664 locomotives and over 14,000 wagons which have the capacity to haul 180 million tonnes of freight and are diversified across mineral and bulk haulage, steel and intermodal.

Asciano Chairman Malcolm Broomhead said: “We are pleased to recommend to our shareholders this compelling transaction with Brookfield Infrastructure. Asciano’s businesses are unique and highly strategic. Pacific National is one of the largest providers of above rail freight haulage services in Australia. Patrick is a leading business in bulk ports and stevedoring, with a presence in over 40 sites in Australia and New Zealand."
 

“The primary focus of the Asciano Board has always been, and continues to be, to act in the best interests of shareholders and maximise shareholder value. After careful consideration of all the options available to the Company, 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 reflect fair value, is in the best interests of all shareholders.” 
 

It is anticipated that Asciano shareholder approval will be sought at a meeting to be held in mid-November 2015, and that the merger will be completed prior to year-end, subject to the various regulatory approvals referred to above.

For more information, please visit Brookfield Infrastructure’s website atwww.brookfieldinfrastructure.com.