Borealis Infrastructure, the infrastructure investment unit of the Ontario Municipal Employee Retirement System (OMERS), has lowered its bid for Teranet Income Fund from C$11 per unit (€6.9; $8.6) to C$10.25 per unit.
Borealis lowered the bid “as a result of deterioration in economic and financial market conditions and increases in the cost of capital”, the firm said in a statement. All other terms in the original bid stayed the same, Borealis said, and the deadline for accepting the offer has been moved back to 10 November.
Borealis extended its unsolicited offer of C$11 per unit on 4 September to acquire the Toronto Stock Exchange-listed provider of electronic land registry services, which, including C$470 million of assumed debt, valued the company at C$2 billion.
Based on Teranet’s basic and diluted weighted average units outstanding as of 30 June, the lower bid would decrease that sum by about C$116 million.
The move comes less than two weeks after Teranet’s board of directors, which had previously rejected the bid as too low and tried to secure a superior offer from another bidder, withdrew its opposition to the bid.
Borealis has long expressed interest in acquiring Teranet, which is the sole state-licensed provider of electronic land registration services in the province of Ontario through 2017. Thanks to this exclusivity, Teranet has stable, long-term contracted and protected cashflows. Pension investors like OMERS have had a growing appetite in recent years for infrastructure and infrastructure-like investments that offer cash flows with these types of characteristics.
Borealis previously attempted to initiate takeover discussions with Teranet three times before launching its unsolicited takeover offer on 4 September.