Analysts were reasonably accommodating of the revised and ultimately successful bid for Hills Motorway by Transurban.
Breaking the impasse between the infrastructure companies with a 25c cash sweetener which effectively valued Hills at $11.29 a share was a welcome development, with both sets of security holders pencilled in for benefits.
Citigroup Smith Barney analyst Sanjay Magotra points out Transurban shareholders will get 50c a share compared with 39c a share in fiscal 2006 and 54c a share against 43c a share for fiscal 2007. For Hills holders the leap is even greater.
Then there's the capital gains tax rollover relief for Hills shareholders and operational synergies of $5 million per annum for the combined group.
"In anticipation of full control of Hills [Transurban has 53 per cent], we have revised our forecast earnings for Transurban.
"We now estimate fiscal 2005 loss of $68 million from a loss of $63 million and fiscal 2006 loss of $53 million from a loss of $40 million," Mr Magotra said. "While the acquisition has reduced our valuation of Transurban ... we see potential offset if traffic on Westlink M7 delivers on consortium's estimates."
ABN Amro, meanwhile, sees obstacles out of the way and has upgraded its share price target to $8.75 from $7.90.
Transurban finished 11c higher at $7.54 and Hills shares rose 5c to $11.30
TCL Price at posting:
0.0¢ Sentiment: None Disclosure: Held
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