Australia's Asciano says suitors weigh truce, $6.5 billion joint bid

Tue Feb 23, 2016 12:30am EST
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By Byron Kaye and Swati Pandey

SYDNEY (Reuters) - Canada's Brookfield Asset Management Inc (BAMa.TO: Quote) and its Australian rival are weighing a joint A$9 billion ($6.5 billion) bid for Australia's biggest rail and port operator, an unusual measure aimed at ending the fiercest takeover battle now raging in the Asia Pacific after seven months.

Target firm Asciano Ltd AIO.AX revealed on Tuesday that Brookfield and the company it has been bidding against, Australian cargo handler Qube Holdings Ltd QUB.AX, have entered talks about a possible joint offer.

The ceasefire, if it leads to a concrete offer, would deny the rival firms full control of the Australian freight giant but would spare further delays in clinching a deal as they outbid each other.

It could also circumvent a run-in with regulators, particularly the Foreign Investment Review Board, as the proposal under discussion involves giving Brookfield and Qube joint ownership of Asciano's ports - which the government views as strategic assets that should remain in Australian hands - while their foreign bid partners would own the railways.

Reuters previously reported that Brookfield has partnered with the Qatar Investment Authority and the Canadian Pension Plan Investment Board, while Qube has teamed up with government-owned China Investment Corp. [CIC.UL]

"Any proposal for more Chinese interest in ports would be likely to be sensitive," said an M&A lawyer who also asked not to be named because of the sensitivity of the matter.

"Provided this aspect is managed well, I expect that FIRB would be fine with what I understand to be predominantly Canadian and Australian interests taking control of these assets," they added.

Qube shares rose more than 10 percent on hopes that a joint offer might end the stand-off. Asciano shares rose 1.5 percent.   Continued...