Brookfield buys Australia's Asciano for $6.55bn

Aug 17, 2015, 3:12 PM EDT
Bruce Flatt, chief executive officer of Brookfield Asset Management Inc., smiles during the company's annual general meeting in Toronto, Ontario, Canada, on Wednesday, May 6, 2015.
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Canada's Brookfield agreed to buy Australian rail and port operator Asciano for $6.55 billion. Brookfield will buy Asciano through its publicly traded subsidiary Brookfield Infrastructure Partners for A$6.94 a share in cash and 0.0387 Brookfield Infrastructure units, the company said in a statement Monday, reports Bloomberg. The offer has an implied value of about A$9.15 a share, or 38 percent more than Asciano’s price on June 30, a day before it disclosed talks with Brookfield.

“This transaction enables us to acquire premier transport infrastructure assets in a geography we know well and establish two leading global platforms, with solid long-term prospects,” said Sam Pollock, Brookfield Infrastructure’s chief executive officer. The transaction would be the largest takeover for Brookfield Infrastructure, adding Asciano’s Australian container terminals with Brookfield’s terminals in North America and Europe, Pollock said.

Record low interest rates have added to the M&A appeal of a sector already struggling with lower valuations because of a downturn in coal exports, notes Reuters. Asciano has a network of port and rail assets in Australia, including container terminal operations in Sydney, Melbourne and Brisbane. The company also offers rail freight services through its Pacific National unit.

"Combining Asciano's Australian container terminals with our existing assets in North America and Europe provides the foundation for a global container platform," said Brookfield Infrastructure Chief Executive Sam Pollock. The deal will also create a "powerful" international rail logistics business, he said. Brookfield Infrastructure's assets in Australia include the Dalrymple Bay Coal Terminal in Queensland and a freight rail network.