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Qube share price soars on new deal with Brookfield

port ship
Credit: mhobl

The Qube Holdings Ltd (ASX: QUB) share price has jumped 10% to $2.22, after the ports, logistics and transport company announced that it was in discussions with Brookfield Infrastructure to acquire Asciano Ltd (ASX: AIO) under a new takeover proposal.

The new offer from the combined Qube/Brookfield consortium comprises cash of $9.28 for each Asciano share.

Qube has already made a takeover bid for Asciano with a number of partners including Global Infrastructure Management (GIP), Canada Pension Plan Investment Board (CPPIB) and CIC Capital Corporation. Brookfield had also made an offer in 2015 for Asciano of around $9.22 per share.

Just last week, Asciano’s board recommended Qube’s proposed takeover – which consisted of $7.045 in cash and 1 Qube share per Asciano share.

This is how Asciano would be split up…

Qube would acquire the Patrick Container Terminals Business in a 50/50 joint venture with Brookfield and other members of the Brookfield consortium for a price of $2.915 million – with Qube’s share being $1,457.5 million.

GIP, CPPIB, CIC and some members of the Brookfield consortium (not Brookfield Infrastructure) would acquire the Pacific National rail business.

Brookfield and its consortium would acquire the Bulk & Automotive Ports Services businesses, including a 50% interest in Australian Amalgamated Terminals (AAT). Qube would have the option to subsequently acquire the 50% of the AAT business subject to clearance by the Australian Competition and Consumer Commission (ACCC).

The $9.28 per share offer by Qube and Brookfield is designed to alleviate the issues raised by the ACCC, including the acquisition of Pacific National Rail by Brookfield Infrastructure. That suggests the deal is highly likely to receive approval by the ACCC, allowing Qube and Brookfield to take over Asciano.

The market remains undecided about this deal for Asciano – with Asciano’s share price rising just 1.6% to $9.01 – 27 cents less than the takeover price.

Foolish takeaway

It’s full circle for Qube chairman Chris Corrigan who was once the CEO of Patrick before it was taken over by Toll Holdings in 2006. Patrick and Pacific National were demerged from Toll Holdings in 2007 and together became Asciano.

Qube is set to release its half year results for the 2016 financial year tomorrow, Wednesday, February 24.


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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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