Further delay to $US 1.69bn sale of One Rail Australia

THE Australian Competition and Consumer Commission (ACCC) has again postponed handing down its decision on the proposed sale of the One Rail Australia (ORA) freight business to Queensland-based operator Aurizon.

In October 2021, Aurizon announced that it had signed an agreement with Macquarie Asset Management to acquire ORA for $A 2.35bn ($US 1.69bn). The transaction is subject to ACCC consent and in December 2021, the ACCC launched a review with the decision due to be handed down on March 10. At the end of February, the ACCC advised it had suspended this announcement, pending receipt of further information from Aurizon.

Aurizon says it has been working with the ACCC since that time to provide additional information.

The ACCC has now released a statement of issues, inviting submissions from interested parties by June 23 with a view to making a final determination on the sale by July 14.

At the time the sale was announced, Aurizon committed to divest ORA’s east coast rail operations through a demerger or a trade sale, whichever created greater value for Aurizon shareholders.

The ACCC says it needs to be satisfied that any new purchaser, or the demerged business, would be an effective, stand-alone, long-term competitor in the supply of coal haulage and non-coal bulk commodity rail haulage.

“A critical issue for the ACCC is determining whether Aurizon’s divestiture undertaking will be effective in replacing the competition that would be lost because of the proposed acquisition,” says ACCC chair, Ms Gina Cass-Gottlieb. “An important issue is whether the financial arrangements that Aurizon has proposed for the new entity, including its proposed debt levels, would affect the proposed demerged business’s ability to become an effective competitor.”

In a release to the Australian Stock Exchange, Aurizon says it welcomes the latest statement from the ACCC seeking market feedback on the proposed acquisition, and is confident that its undertaking to divest the east coast operations will address any competition concerns identified by the ACCC.