Form the SMH todayIt didn't take long for the Ontario Teachers'...

Form the SMH today


It didn't take long for the Ontario Teachers' Pension Fund to cut and run after recent takeover overtures for Transurban were rejected by the board of the toll-road group.

Less than a week after a $7.2 billion consortium bid at $5.42 a security was knocked back without being put to shareholders, Ontario Teachers has silenced lingering speculation that key institutional investors may consider a fresh takeover proposal. Instead it has appointed JP Morgan to sell its 13 per cent stake in an overnight bookbuild.

Word spread around dealing desks late yesterday afternoon that the broker was looking for bids above $4.44 a security, valuing the interest at $700 million. All being well, the sale will be completed this morning. Notably, the floor price represents a 3.5 per cent discount to the $4.60 price at which Transurban completed a $542 million rights issue to fund the Lane Cove Tunnel acquisition last week.

The decision by Ontario Teachers to depart the Transurban register follows a change of policy at the pension fund late last year that prevents its infrastructure fund, which had been responsible for the Transurban investment, from holding listed investments.

Following the policy shift the only options open to the infrastructure fund managers were to take Transurban private, or to transfer the investment to a separately managed listed equities fund. It is the listed equities team that has now made the decision to sell. The same managers sold a significant position in Macquarie Infrastructure Group when it was transferred into their fund late last year.

While the decision to sell is not a surprise, the timing is curious. Building a book on a day when the ASX200 index has just weathered a 143-point fall, its largest of the year to date, is unlikely to be conducive to maximising competitive tension.

Transurban securities closed 12? lower at $4.68 yesterday.