Looks like the deal is falling over:
SHM 18/2/10
Transurban 'on the right road'
MATT O'SULLIVAN
February 18, 2010
TRANSURBAN has defended its rejection of a $6.8 billion bid from two Canadian pensions funds more than three months ago by highlighting its strong earnings and plans for major upgrades to its toll-road assets.
The toll-road operator also officially declared its interest in buying the Lane Cove Tunnel in Sydney, and will inspect its books.
On the same day it reported a first-half net profit of $54.2 million - up from $3.2 million previously - Transurban said it had not received any further approaches from the two Canadian pension funds.
It justified its rejection of the approach from the funds, which have since gained support of the federal government's Future Fund, by insisting that a separate internal review of its value had reaffirmed the board's initial decision and had the support of key shareholders.
But the company would not put a figure on what it valued itself at, other than to say it was ''significantly higher'' than the proposal from the Canadian funds.
Some traders seem to have given up on the Canadians returning with a sweetened offer. Securities in the owner of Sydney's M5 and M7 motorways rose just 4c to $5.10, despite its 17 per cent rise in pretax earnings to $331 million and a 2 per cent rally in the market yesterday.
The stock closed just off its lowest level since the $5.25-a-share bid from the Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan in early November.
''[Transurban] had better cost-cutting [figures] than we were anticipating but most people were more concerned about the Canadians than the result,'' an Austock analyst, Andrew Chambers, said.
In the meantime, Transurban has highlighted its focus on upgrading motorways such as the M2 and M5, as well as showing interest in buying the Lane Cove Tunnel and other motorway assets.
''Obviously we are interested [in the Lane Cove Tunnel] at the right price,'' the chief executive of Transurban, Chris Lynch, said.
''It's adjacent to the M2; it's in our line of business; it's a well-constructed asset; it just had an unrealistic expectation inherent in the original business case.''
However, Mr Lynch indicated Transurban would not be taking an aggressive approach to acquisitions, as he repeatedly insisted that any deals would have to be for ''the right price''. He described suggestions Transurban would have to pursue a $250 million capital-raising to fund a purchase of the Lane Cove Tunnel as ''premature''.
The tunnel's receivers will open a data room for parties interested in the asset at the end of the month. Leighton Holdings officially disclosed its interest as part of a consortium on Friday, while others touted as potential buyers include Queensland Investment Corp and infrastructure funds such as CP2.
Transurban will pay a distribution of 12c a security on February 26, and reiterated its forecasts for the payout to total 24c for the full year - up 9 per cent on the past financial year.
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