Ann: Announcement of Acquisition of LCT and Entit, page-6

re: Ann: Announcement of Acquisition of LCT a... RBS Australia 11/05/2010 1 Buy $5.90 19.4%

Target $5.90 (was $6.00). The company has successfully bid for the Lane Cove Tunnel, the broker suggesting the company has paid a fair price for the asset given the potential for above-average growth going forward.

Discussions have continued with the potential Canadian suitors, though the broker notes the Lane Cove Tunnel deal is likely to cause a delay to any revised proposal being offered.

There is no change to the broker's Buy rating.

Target price is $5.90 Current Price is $4.92 Difference: $0.98
If TCL meets the RBS Australia target it will return approximately 20% (excluding dividends, fees and charges).
BA-Merrill Lynch 11/05/2010 1 Buy, Medium Risk $6.00 21.5%

While it improves Transurban's internal rate of return, the broker suggests the Lane Cove Tunnel was really not all that cheap.

In the meantime, the Canadian funds hinted they may not continue with a takeover of TCL if it raised capital, but now that it is raising capital it will be interesting to see if the Canadians take up their rights and retain 25% ownership. If so, nothing much has changed.

The broker sees TCL's roads as no more than a longer term investment but retains Buy for now on anticipation the Canadians won't just go away.

Target price is $6.00 Current Price is $4.92 Difference: $1.08
If TCL meets the BA-Merrill Lynch target it will return approximately 22% (excluding dividends, fees and charges).
Deutsche Bank 11/05/2010 3 Hold $5.45 10.3%

Transurban's purchase of the lane Cove Tunnel will require a $540m rights issue which will be dilutive for two years, the broker notes.

A problem is raised by the change of control issue, with TCL's two biggest shareholders being rejected by management on its proposals. We now have to see whether they will participate in the rights issue, the broker says, or otherwise become questionable in their longer term commitment to the TCL register.

Target price is $5.45 Current Price is $4.92 Difference: $0.53
If TCL meets the Deutsche Bank target it will return approximately 11% (excluding dividends, fees and charges).