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Canada Pension Plan bids $3.5bn in opposition to toll-road operator Intoll

TOLL-ROAD operator Intoll Group has believed a $3.47 billion conditional takeover proposal from Canada Pension Plan Investment Board.

The offer for Intoll, formed earlier this year from the break-up of Macquarie Infrastructure Group, comes right two months after a CPPIB consortium had its $7.22bn direct for fellow toll-road operator Transurban Group rebuffed.

Intoll said it hasn’t thus far decided whether to support the cash or unlisted share-based plan of arrangement proposal from CPPIB, which gives shareholders the option of $1.535 coin per security or rolling over their investment into an unlisted investment vehicle.

"The directors of Intoll have not formed a behold as to the adequacy of the proposal and accordingly recommend that Intoll security holders take no action at this time," said Intoll chair Paul McClintock.

The response from Intoll, which owns 30 per cent of the 407 ETR on the surface Toronto, one of the world’s most valuable road assets, and 25 for cent of Sydney’s Westlink M7, suggests the $1.535 through security bid may not be enough to secure the necessary act as aid to of the target’s board.

This is despite the proposed estimation, which may be adjusted for movements in the Australian dollar off the Canadian dollar, coming at a 38 per cent premium to Intoll’s closing worth yesterday of $1.115 and a 42 per cent premium to its book weighted average price over the last month.

By mid-afternoon, shares in Intoll were 33.5 cents, or 30 by cent, higher at $1.45 in a weaker market overall. The benchmark S&P/ASX 200 integral part was 0.46 per cent lower.

The proposal is subject to a include of common conditions, including endorsement of Intoll’s directors and shareholders and Australian from abroad investment approval, but also requires that more than 10 per cent of Intoll investors pick to roll over their stock into an unlisted investment vehicle.

Macquarie Group, that formerly managed MIG, remains Intoll’s largest shareholder, with an 18.3 per cent stake, while asset management firm Lazard holds 10.5 per cent and sovereign wealth fund the Abu Dhabi Investment Authority, that recently became a significant shareholder, has a 9.9 per cent portion.

Intoll has granted CPPIB access to information to conduct due activity over the next three weeks, but hasn’t been granted exclusive negotiation rights, leaving the way open for a possible bidding strife.

"During this period, the (Intoll directors) will engage with CPPIB in kind to determine whether an acceptable transaction can be agreed and induce to security-holders," said Mr McClintock.

Intoll has appointed UBS and authorized firm Mallesons Stephen Jaques as advisers.

CPPIB, a global infrastructure investor through assets valued around $C5.8bn ($6.4bn), said its proposal offered "compelling prize," and complemented its other long-term assets, which include stakes in supply with ~ and natural gas suppliers in Britain, an electricity transmission company in Chile, and Washington pomp’s largest energy utility, as well as 12.9 per cent of Transurban.

"We put confidence in Intoll’s toll road assets are a good fit with CPPIB’s portfolio and protracted-term investment mandate, and are well-situated strategically to benefit from what is yet to be urban growth in Toronto and Sydney," CPPIB executive Andre Bourbonnais declared.

A spokesman for CPPIB said the cash funding requirements for at all deal would be sourced from the pension fund’s existing funds, and there is no change to its intentions in relation to its major stake in Transurban.