Qube Bid Looking Good

A decision by the Australian Competition and Consumer Commission looks to have improved the chances of Qube taking over Asciano. The ACCC have rejected a proposal by Canadian Railway giant, Brookfield, to takeover the Asciano operation, citing concerns about the company’s long term behavioural undertakings.

 

The proposed sale for $9 billion would further reduce competition in the rail sector, where there is a small number of players. The ACCC was wary Brookfield would own too large a proportion of the freight rail business in Australia. It would also own assets above and below the rail in Western Australia as well as owning rail and port facilities in Queensland.

 

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Meanwhile, the slightly higher bid from Qube is now in the box seat. Any deal is unlikely to attract the attention of the ACCC as the competition implication look benign. The plan behind the Qube approach will see Qube’s partners, Global Infrastructure Management and the Canada Pension Plan Investment Board dividing the spoils. The plan is for Qube to take ownership of the Patrick port terminal business, while GIM and CPPIB take on the ownership of the Pacific National rail business.

 

There is still a small hope the Brookfield may get up and further negotiations between Asciano and the ACCC continuing to find a solution which would leave the ACCC Chairman, Rod Sims, a bit more comfortable about the competition implications.

 

Analysts are now putting the chances of Qube getting up at around 50/50, the kind of odds Chris Corrigan, at the helm of Qube will relish. This is a familiar battleground for him, Corrigan became a well known face on the TV sets of Australia during the long waterfront dispute with his, at the time, Patrick Corporation locking horns with the Maritime Union of Australia from June 1997 through to June 1998.

 

Seven years later, Corrigan was back in the news with Patrick fighting long and hard (over nine months) to resist Paul Little’s Toll taking control of the ports giant. When the dust settled, two entities Toll and Asciano had swallowed up Patrick and Corrigan left the public stage. He would reappear sometime later, in 2010, when the Qube Logistics was formed and included the port elements of P&O.

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Author: Tim Giles

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