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Transurban Group’s acquitision of WestConnex may be blocked by ACCC

The Australian Competition and Consumer Commission (ACCC) will extend its review of the proposed acquisition of a 51% stake in the $16 billion WestConnex project by a consortium led by Transurban Group (ASX: TCL).

The ACCC’s preliminary views are around concerns that Transurban is already Australia’s largest toll-road operator controlling around 15 of 19 toll roads across Australia.

According to the ACCC, if the acquisition of WestConnex takes place Transurban can have “significant incumbency advantages when competing for future toll-road projects.”

“It has access to highly detailed traffic data when bidding for new roads and is able to leverage its existing toll roads to offer unique unsolicited proposals to state governments.”

The share price of Transurban has fallen over 6% since the news of ACCC’s review and is trading on a forward price-earnings-ratio (PER) of 58x, paying an annual dividend yield of 5% with 8% franking.

Macquarie Atlas Roads Limited (ASX: MQA), a global toll road developer and operator, is trading on a forward PER of 28x.

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Motley Fool contributor Rosemary Steinfort owns shares of Transurban Group. The Motley Fool Australia owns shares of and has recommended Transurban Group. 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 Scott Phillips.

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