Australian Toll Road Operator Intoll Group Recommends A$3.4 Billion Takeover Bid From Canada Pension Plan Investment Board (CPPIB)
: Intoll Group's board of directors recommended the takeover offer put forward for the Australian toll-road operator by the Canadian Pension Plan Investment Board (CPPIB). The CPPIB offer is pegged at A$3.4 billion and is an improved offer from the
Online, August 30, 2010 (Newswire.com) - Australia Aug, 30, 2010 Intoll Group's board of directors recommended the takeover offer put forward for the Australian toll-road operator by the Canadian Pension Plan Investment Board (CPPIB). The CPPIB offer is pegged at A$3.4 billion and is an improved offer from the previously floated bid. The CPPIB is Canada's second largest pension manager and comes as the company's second foray in the Australian toll road sector.
Previously, CPPIB had tried, through a joint venture with the Ontario Teachers' Pension Plan Board to purchase the Transurban, but the bid was unsuccessful. Even so, the deal still has to attain the approval of Intoll Group shareholders, such as the Abu Dhabi Investment Authority and Macquarie Group, two of the major shareholders in the Australian firm. According to Intoll Group, the Canadian firm had agreed on a deal that will see it remit A$1.52 for every Intoll stapled security.
The remittance represents a 2.5% improvement on the offer in terms of the current exchange rates to CPPIB's initial proposal as at the 15th of July. Further to that, the cash and scrip offer values Intoll Group at A$3.4 billion, said the company. Intoll Group compared the enhanced offer with the original, previous offer that was pegged at 1.186 Canadian dollars, plus 23 Australian cents per share and would have valued Intoll at about A$3.39 billion at current share prices.
Paul McClintock said the offer from CPPIB is reflective of an attractive premium when looked at in terms of Intoll's pre-15th July trading prices. CPPIB made an indicative offer for Intoll last month, sending shares in the target up 30% at the time. Analysts have stated that infrastructure assets such as toll-roads and airports are preferred targets for global funds because they provide stable, long term revenue streams.
This arises from the fact that, with the pensions plans catering for an increasingly aging populace, the funds have to be able to pay higher contributions in the coming years, hence the rush for secure infrastructure investments, analysts argue. Canadian pension funds, with their deep pools of capital and an ability to hold investments for long periods, are seen as a new breed of financial investor that can out-muscle buyout firms.
Intoll Group, formerly Macquarie Infrastructure Group currently owns and manages a 25.0% interest in the Westlink M7 to the west of Sydney in Australia and a 30% interest in Highway 407/ETR in the Greater Toronto Area of Canada.
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