Key Takeaways:
- Atlas Arteria board rejects IFM's A$6.89 billion takeover offer.
- Independent expert values company at A$5.39-A$6.20 per share.
- Offer of A$4.75 per share deemed "not fair or reasonable."
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Atlas Arteria rejects A$6.9B bid as 13% below expert valuation
The board of Australian toll road operator Atlas Arteria has formally rejected a A$6.89 billion hostile takeover offer from IFM Global Infrastructure Fund, after an independent expert valued the company at least 13% higher than the bid.
"The offer materially undervalues the company," Atlas Arteria’s independent chairs Debra Goodin and Fiona Beck said in a letter to shareholders, calling the bid "too low, opportunistic and highly conditional."
IFM offered A$4.75 cash per share, a price that represented a premium of less than 10% to the closing price when the bid was made. An independent report, however, placed Atlas Arteria’s control valuation in a range of A$5.39 to A$6.20 per share. Even IFM's conditional higher offer of A$5.10, contingent on securing a 45% stake, remains below the expert's lowest valuation.
The rejection now puts the focus on Atlas Arteria's ability to unlock shareholder value independently. The board has pointed to "operational and strategic initiatives," including the potential divestment of its Chicago Skyway toll road, as its path to realizing a valuation superior to the one offered by IFM.
Offer Details
IFM Global Infrastructure Fund, through its investment unit Diamond Infraco 1, proposed to acquire all shares it does not already own in Atlas Arteria. The initial offer was A$4.75 per share, valuing the company at approximately A$6.89 billion ($4.94 billion).
The offer included a conditional increase to A$5.10 per share if IFM could secure an interest of 45% or more before the offer's closing. However, with shares last closing at A$4.84, the market appears to be pricing in some possibility of a revised bid, while still remaining significantly below the independent valuation.
Board's Stand
In a target's statement lodged with the ASX, Atlas Arteria's independent directors unanimously recommended that shareholders reject the offer. The board's confidence is bolstered by the independent expert's report which concluded the offer was neither fair nor reasonable.
The board has committed to pursuing greater value through its existing strategy, which includes optimizing its current portfolio of toll roads and exploring strategic divestments to redeploy capital.
This article is for informational purposes only and does not constitute investment advice.
[1] Atlas Arteria's independent expert finds IFM Global's offer not fair or reasonable[2] Atlas Arteria lodges target statement rejecting IFM hostile takeover[3] Volkswagen Atlas Trade in Value: Here's What You Should Get and Why[4] Atlas Arteria Deems IFM Global’s Takeover Offer Unfair & Unreasonable - Global Banking & Finance Review
