Asciano says no to $2.7bn offer from TPG, GIP

Australia’s largest railway and port operator has decided to not allow the US private equity firms to conduct due diligence needed to finalise a bid. The initial offer from TPG and GIP ‘undervalues the business', the company has said.

Asciano, an Australian transport infrastructure company, has turned down TPG's and Global Infrastructure Partners’ A$2.9 billion ($2.7 billion; €1.7 billion) bid to acquire the company.

Asciano this morning issued a statement to the Australian Stock Exchange saying it had received a non-binding proposal from the global private equity firms to acquire all the securities of the listed company.

The two firms, in their joint proposal, had offered A$4.40 per security or alternatively, to acquire securities in an unlisted bidding company, sending the price of Asciano’s securities up by 16.4 percent to A$4.83 by the end of trading on Monday.

TPG and GIP wanted to complete due diligence on the company prior to finalising any binding proposal. However, later on Monday, Asciano said that it “decided not to agree to due diligence” because the firms’ offer was too low and “undervalued the business”.

According to a market source, the two private equity firms are considering their position following the latest development. A spokesperson for the firms declined to comment.

Asciano owns and manages Pacific National rail operations and Patrick ports. Pacific National provides bulk haulage services for coal, grain and bulk industrial products, and has more than 600 locomotives and 14,000 wagons. Patrick’s ports and stevedoring business involves the operation of container terminals in four of Australian container ports.

The company was listed on the ASX in June 2007, following Toll Hondings’ decision to restructure itself and to spin-off its rail and port operations.

Last year, TPG was part of a Macquarie-led consortium that sought to acquire Australian airline Qantas for A$11.1 billion, but the deal was rejected by Qantas shareholders.

GIP is a joint venture between Credit Suisse, GE Infrastructure and AIG Financial Products, a subsidiary of AIG. The firm closed its first infrastructure fund on $5.64 billion (€3.62 billion) in May this year.