confirmed here
SYDNEY, Dec 13 (Reuters) - Australian toll road operator Transurban Group (ASX: TCL.ax) , is in talks to take over rival Sydney Roads Group SRG.AX, a source close to the deal said on Wednesday.
Trading in the shares in both companies was halted at the start of trade. Transurban said in a statement it had been involved in talks on Tuesday, which led it to request the trading halt.
Transurban operates the M2 motorway, a major toll road carrying traffic northwest from Sydney, and owns half of the M7, which connects three other motorways in the west of the city. It has a market capitalisation of about A$6.4 billion ($5.0 billion).
Sydney Roads, which listed on the Australian Stock Exchange in July, owns 70 percent of the M1 and 50 percent of the M4 and M5 toll motorways, has a market value of A$1.1 billion. It was formed from the spin off of roads held by Macquarie Infrastructure Group (ASX: MIG.ax) .
Transurban is being advised by Citibank on the transaction, while Macquarie Bank Ltd. is helping Sydney Roads Group.
Transurban officials declined to comment, but said a announcement will be made on Thursday. Sydney Roads Group also declined to comment.
"There is a great opportunity to create an integrated road network that will deliver a whole series of synergies, cost savings and benefits to customers," the source added.
Macquarie Equities said in a report on Wednesday that it expected Transurban to make a share bid for SRG.
"A more tangible benefit for TCL (Transurban) is that controlling the M1, M2, M4, M5, and M7 would provide a level of traffic knowledge second only to RTA (Roads and Traffic Authority), and quite possibly stronger than the RTA," the Macquarie Equities note said.
"This level of network knowledge would clearly provide a competitive advantage on bidding for any new roads with the Sydney network," the report added.
The Roads and Traffic Authority, or RTA, is a New South Wales state government body that oversees roads and vehicle licensing.
Transurban shares last traded at A$7.69 while Sydney Roads shares at A$1.16. ($1=A$1.27
TCL Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
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