* Qube's A$9 bln offer beats Brookfield's A$8.9 bln
* Asciano switches support to Qube's higher offer
* Asciano says expects Brookfield to raise bid
* Qube bid raises prospect of partial Chinese ownership
(Recasts, Adds Asciano and Qube quotes, deal context, shares)
By Byron Kaye
SYDNEY, Feb 8 (Reuters) - The bidding war for Australian
freight giant Asciano Ltd AIO.AX heated up on Monday as local
rival Qube Holdings Ltd QUB.AX upped its proposal to A$9
billion ($6.4 billion), trumping Canada's Brookfield Asset
Management Inc BAMa.TO .
Asciano said it favoured Qube's approach, dropping its
previous preference for Brookfield's $8.9 billion offer first
announced in August 2015 in what would be the biggest ever
Canadian takeover of an Australian company. It also said it
expected Brookfield to raise its offer.
Sydney-based Asciano, operator of Australia's largest rail
freight network, is seen as good value due to its exposure to
the resources sector, which is being hit by falling commodities
prices. It is seen as doubly appealing because of a
recently-finished restructure focusing on automation.
Its switch of preference marks its first departure from an
unwavering endorsement of Brookfield's approach, which was
Australia's biggest inbound takeover offer in four years. For
the first time, A$2 billion Sydney-listed Qube is the
frontrunner to seize control of Asciano, ahead of CAD$40 billion
($29 billion) Brookfield.
A sale to Qube would put a major chunk of Australia's rail
freight network under partial Chinese ownership since Qube has
taken on sovereign fund China Investment Corp CIC.UL as a
co-investor, potentially raising fresh regulatory and political
hurdles.
"Following detailed consideration, the Asciano board has
determined that the Qube Consortium Proposal is a superior
proposal," Asciano said in a statement to the Australian
Securities Exchange, noting Qube raised its indicative offer to
A$9.24 per share from A$9.17.
Asciano added that it has given the Canadian firm until Feb.
15 to match the Qube offer. It also published a letter from the
Canadian's Chief Executive Officer Sam Pollock promising to
raise its offer to A$9.28 per share from A$9.10 and make it all
cash.
However, Asciano said, its board determined that "at this
stage there was no certainty that a new Brookfield
Infrastructure proposal would be made or the timing of such a
proposal".
In a statement, Qube Managing Director Maurice James said
Asciano's decision was "a welcome development" and a
"significant step" towards its goal of cutting costs and
boosting productivity.
Both approaches for Asciano depend on getting approval from
antitrust regulator the Australian Competition and Consumer
Commission, which will give a ruling on March 24. It has raised
concerns with both takeover approaches.
Asciano shares were up 2.5 percent at A$9.11, having touched
an eight-year high of A$9.14 as investors warmed to the prospect
that a takeover will eventuate.
($1 = 1.4116 Australian dollars)