Asciano Limited Takeover – What a complicated deal!

Anyone with shares in Asciano (AIO) would need to read the Bidder’s Statement from Nitro Corporation Pty Ltd very carefully to decide whether to take up the offer for their shares or not, as it involves cash and CDI’s in Nitro’s ultimate holding company, Brookfield Infrastructure Partners L.P (which are not yet listed on the ASX!).

The offer from Nitro comprises $6.9439 for each share held, plus .0387 BIP CDI’s (Chess Depository Interests). ¬†As the AIO shares are currently trading at $8.79, the question to be answered is .387 BIP CDIs worth more than $1.84 the difference between the share price and the offer?

To calculate this, we need to go back to the NYSE to establish the value of the BIP CDI’s which – of course are expressed in US dollars, so need to be converted to $Aud.

On 20 November 2015 (the date used to define small parcels), the CDI’s were worth $41.97 US per CDI, making the offer of .387 CDI’s per share $1.624 US. Converting that price to $A (@.72C) means $2.25 should be added to the $6.9439 cash, giving a “price” of $9.19 compared with the market price of $8.79 – a premium of .40c or 4.55%.

Of course the variation in exchange rates, the variation in the relative share/CDI prices and the impact of rounding all make the true value of the offer difficult to calculate.

However, if you don’t mind holding o/s investments (to be listed on the ASX sometime in the future) then it does appear that the offer is worthwhile.

The latest development is that Nitro Corporation (an indirect subsidiary of Brookfield Infrastructure Partners L.P.) has extended their offer until 7.00 pm on Friday, 22 January 2016.

As always, if you have any queries, please contact us.

 

Regards

 

Stephen Shortis

 

General Advice:  Please note that any advice given in this blog is of a general nature only and should not be relied on, as it does not take into account your personal circumstances. If in doubt, please contact your own financial adviser.

8 Responses to “Asciano Limited Takeover – What a complicated deal!”

  1. Alfred HowellDecember 15, 2015 at 2:33 pm #

    I spent last night reading through the document.
    Which has too many “maybes” and conditional items for me to be comfortable with.
    As a shareholder I’ll be seeking further advice and possibly selling on the open market.
    Suffice to say there’s no warm fuzzy feeling towards the board at this stage, I would of liked to see what the outcome of the QUBE offer would be.

    • StephenDecember 16, 2015 at 12:52 pm #

      Hi Alfred,

      Yes it certainly is a bulky document with a number of factors influencing the final price. A good approach is certainly to spend some more time on the document with a trusted advisor as I believe most shareholders will find the offer confusing, and therefore will be less likely to accept it.

      Regards

      Stephen

  2. LouiseDecember 15, 2015 at 6:36 pm #

    I don’t understand “if you don’t mind holding o/s investments…then it does appear that the offer is worthwhile.”
    If I sell my small amount of Asciano shares to Nitro, how am I going to be holding overseas investments, when all my shares will be presumably gone?

    • StephenDecember 16, 2015 at 12:49 pm #

      Hi Louise,

      As the offer to buy your shares is $6.9439 PLUS .0387 BIP CDI’s it means that – compared to the current price of Asciano shares – the offer is only worthwhile if the BIP CDI’s have some reasonable value. The CDI’s are issued by Nitro’s parent company, and are currently listed on the New York Stock Exchange, so the value of these (which need to be converted from US dollars to Aust dollars) needs to be taken into account to calculate the true worth of the offer. It is proposed that the BIP CDI’s will eventually be listed on the Australian Stock Exchange as well if and when the takeover is successful so the reference to o/s investments may become a moot point.

      Regards

      Stephen

  3. Len PearseDecember 22, 2015 at 3:13 pm #

    Steve, I see BIP is now US$37.25, quite a drop from the US$41.97 as at 20 Nov. Having done rough calcs on what the offeris worth to me vs what QUBE might offer, I will wait.

    • StephenDecember 26, 2015 at 7:58 am #

      Yes Len,

      That would seem an appropriate approach! With so many dynamics to the situation, the decision on which approach to take will need to be based on the most up-to-date information (and a crystal ball as well!).

      Regards

      Steve

  4. joanneJanuary 10, 2016 at 11:05 am #

    I am quite happy with my AIO share and don’t want to sell them- I believe that Aust. rail is a great investment for the future- and I really don’t want an overseas company to let me know it they would want to pay dividends when they feel?- I think we have seen enough of how oversea company’s have gone broke with the last collapse?

    • StephenJanuary 10, 2016 at 2:46 pm #

      Hi Joanne,

      Thanks for your comment. It would appear at this stage that either Brookfield or CUBE will be the new owner of Aust rail and Patrick Corporation (which owns the four largest shipping terminals) once the ACCC has made their ruling in mid February. Either way, you should consider the offer to buy your shares as both are likely to be above market rate.

      Regards

      Stephen

Leave a Reply