rapid ascent...hot off the press

Asciano in rapid ascent on strength of takeover offer
April 21, 2009

Article from: Australian Associated Press

SHARES in Asciano Group soared yesterday amid speculation the debt-laden transport and infrastructure group had received a takeover offer.

The port and rail operator yesterday confirmed that a deadline for indicative bids on some or all of its assets had passed on Friday, and the board would meet to discuss the offers this week.

A company spokeswoman said she was unable to comment on the source and scope of the bids.

Asciano shares closed 38.5c, or 33.19 per cent, higher at $1.545.

The huge surge continues the stock's rollercoaster ride over recent months as Asciano battles to reduce its $4.6 billion debt.

It has been trying to raise up to $1 billion to reduce debt by offloading some assets since August. Last month, it stepped up the process, indicating it would consider a total change of control at the company.

Media reports have suggested private equity funds including Carlyle Group and TPG Capital are among the bidders, along with energy and infrastructure operators across Asia.

TPG Capital and Global Infrastructure Partners (GIP) approached Asciano last August with an indicative, non-binding takeover offer of $4.40 a security, valuing the target at $3.07 billion.

Asciano said the offer undervalued the business and did not allow the firms to proceed to due diligence.

In October, Asciano said TPG and GIP had renewed their interest in the company, although no bid was announced.

Asciano chairman Tim Poole said at the time the long-term value of its assets was "north of $4.40" a share. But conditions have changed since the private-equity groups first approached Asciano, with prices of listed stocks in decline and the cost of capital significantly higher.

Yesterday's share price surge saw Asciano stock move towards its highest closing price this year, which was $1.56 on January 2.

The company had previously indicated it hoped to announce details of a transaction before the end of June. Initially the company sought expressions of interest for its coal business only, but it has since expanded the process to consider proposals for the 100per cent acquisition of either the coal or container ports businesses, as well as proposals for a complete takeover.

China-based Shenhua Energy and investment bank Morgan Stanley are reportedly interested in Asciano's coal haulage business, while private equity funds are believed to be the most likely to pitch for a takeover.