The Aurizon Holdings Ltd (ASX: AZJ) share price is slipping today following news a Swiss buyer may be interested in the company's East Coast rail division.
The rail freight operator's shares are currently swapping hands at $3.55, a 1.8% fall. For perspective, the S&P/ASX 200 Index (ASX: XJO) is down 0.41 at the time of writing.
Let's take a look at the latest news involving the company today.
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Takeover rumours
Aurizon may have a potential buyer for its East Coast rail division, The Australian reported. The publication reported Swiss multinational Glencore has approached Aurizon about a potential acquisition of this segment of its business.
Glencore is the major customer of East Coast Rail, a coal haulage business that also goes by the name One Rail Coal.
In October, Aurizon announced an agreement with Macquarie Asset Management to acquire One Rail for $2.35 billion. This transaction includes two operations, One Rail Bulk and East Coast Rail.
In its financial half-year results presentation yesterday, Aurizon stated it plans to divest its East Coast Rail business via a demerger or a trade sale. Aurizon said it is yet to make a decision on this, but will choose the option that offers the best shareholder value.
The company confirmed it is in talks with potential buyers of East Coast Rail, but did not name the parties involved. Aurizon stated:
Aurizon's financial analysis of One Rail acquisition currently assumes divestment of East Coast Rail through a demerger, although no decision has been made. East Coast Rail is a highly cash generative business – well suited to potential demerged entity.
Discussions ongoing with potential trade sale buyers – final decision to be made on trade sale or demerger after completion – demerger will be progressed in the absence of a compelling trade sale offer.
The asking price for the East Coast Rail business could be about $1 billion, The Australian noted.
Aurizon reported a 4% fall in its net profits after tax (NPAT) to $257 million in its financial results yesterday. Its interim dividend also fell by 27% to 10.5 cents a share.
Aurizon transports roughly half the country's coal exports and carried 202 million tonnes of the commodity in the 2021 financial year.
Aurizon share price snap shot
The Aurizon share price has dived more than 11% in the past 12 months but is up 1.72% year to date.
The company has a market capitalisation of about $6.5 billion based on its current share price.
