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UPDATE 5-Canada's Brookfield buying Australia freight firm Asciano for $6.6 bln

Published 2015-08-18, 12:41 a/m
© Reuters.  UPDATE 5-Canada's Brookfield buying Australia freight firm Asciano for $6.6 bln
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* Brookfield has upbeat view of Australian coal
* Cash-and-stock offer valued at A$9.15 per share
* Offer at 13 pct premium to Asciano's Friday price

(Recasts throughout; adds analyst and company quotes)
By Byron Kaye
SYDNEY, Aug 18 (Reuters) - Canada's Brookfield Asset
Management BAMa.TO is buying Australian port and rail freight
firm Asciano AIO.AX for $6.6 billion to form a global
logistics player, scooping up an asset that has been made
cheaper by a slump in coal prices.
The deal, the largest purchase of an Australian firm by an
overseas entity since 2011 and the biggest acquisition by a
Canadian firm in that country, underscores the huge
international appetite for Australian infrastructure.
It also casts a vote of confidence in the long-term future
of the Australian coal industry, which is expected to defy
global pressure on high polluting energy sources and grow
exports in the years ahead. Coal exports are a key generator of
earnings for haulage companies like Asciano.
After slumping to 8-year lows, the coal price CO-FOBNWC-AU
will probably stop falling soon and a lower Australian dollar
means coal producers "are probably in better condition today
than they were a year ago", Brookfield's infrastructure chief
executive, Sam Pollock, told journalists in Sydney.
Record low interest rates and a shrinking currency have
added to the M&A appeal of the Australian logistics sector which
is already struggling with lower valuations because of a
downturn in commodity prices.
Asciano's former parent company, Toll Holdings, agreed to a
A$6.5 billion takeover by Japan Post Holdings IPO-JAPP.T
earlier this year, while larger rail freight provider Aurizon
Holdings AZJ.AX has been seen as a potential takeover target.
ID:nL4N0VS23U
Adding to Asciano's appeal, the Sydney-listed company also
on Tuesday beat analyst expectations with a 19 percent jump in
underlying net profit for the year to end-June due to the
benefits of a A$3 billion overhaul aimed at automating its
equipment.
Asciano's shares have traded below Brookfield's offer price
since it first disclosed the Canadian company's approach on July
1. On Tuesday, the shares rose nearly 8 percent to an intra-day
peak of A$8.75, their highest since 2008, but still below the
offer price of A$9.15.
"You've got currency risk and the risk of where those
Brookfield shares will trade," said Morningstar analyst Ross
MacMillan, noting that the cash and scrip offer is expected to
close in December. The two companies and analysts did not see
any significant regulatory hurdles for the deal.
Asciano said that instead of a final dividend it will pay a
special dividend which effectively values the shares at A$9.54,
and offer a "mix and match" component so shareholders can choose
how much cash or scrip to receive. Brookfield will list in
Australia following the deal, the companies said.
($1 = 1.3567 Australian dollars)

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