July 01, 2015

Brookfield makes $A 8.8bn bid for Asciano

Written by  Keith Barrow and Mark Carter
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ASCIANO, the parent company of one of Australia's largest railfreight operators Pacific National (PN), confirmed on July 1 that it has been approached by Canada's Brookfield Asset Management in a $A 8.8bn ($US 6.8bn) takeover bid.

Asciano says it is in exclusive discussions with Brookfield over an indicative cash and script bid for a 100% stake, which values the company at $A 9.05 per share. If successful, the takeover would be the seventh largest acquisition of an Australian business by a foreign company.

Railfreight represents a major proportion of Asciano's business, accounting for 60% of the company's total revenues and 70% of Ebitda in the 2014 financial year. Asciano merged its PN Coal and PN Rail business units into a single division in February 2014.

PN is Australia's second-largest coal haulier and has a 72.4% share of the New South Wales rail coal market (by net tonne-km) and 30% of the Queensland market, while the company dominates the national intermodal market with a 70% share. PN operates 578 locomotives and 11,666 wagons and employs a workforce of 3771 staff across Australia.

Brookfield Infrastructure Partners is also a major player in the Australian rail industry and its Brookfield Rail subsidiary manages the 5500km 1067mm-gauge network in Western Australia under a 49-year lease awarded by the state government in 2000. The network carried 71 million tonnes of freight in 2013.

The proposed takeover could create a minor conflict of interest in Western Australia, where PN shares Brookfield's Perth - Kalgoorlie standard-gauge line with other interstate freight operators.

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