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Melbourne-based infrastructure investor IFM Global Infrastructure Fund has launched an unsolicited off-market takeover bid to acquire all remaining shares in toll road operator Atlas Arteria (ASX: ALX) it does not already own, in a deal that values the company at up to $7.4 billion.
Diamond Infraco 1 Pty Ltd, a wholly-owned subsidiary of IFM Global Infrastructure Fund (IFM GIF), lodged its bidder's statement on Sunday offering $4.75 cash per stapled security, with the price rising to $5.10 per security if the bidder's relevant interest reaches 45 per cent or more before the offer closes.
IFM Global, which already holds 34.48 per cent of Atlas Arteria and is the largest shareholder in the group, has declared the offer its "best and final" in the absence of a competing proposal.
Atlas Arteria's board described the bid as unsolicited, saying there had been "no communication" from IFM prior to receipt of the bidder's statement.
The board characterised the $4.75 offer as "a premium of only 10 per cent" on the most recent closing price and urged shareholders to take no action while the proposal is assessed.
News of the takeover bid sent Atlas Arteria shares to a high of $5 this morning, although they eased back to $4.87 by 10.39am (AEST) - up 12.5 per cent from Friday's close.
In its bidder's statement, IFM Global took aim at Atlas Arteria's recent strategic direction, criticising the company's pivot toward new mergers and acquisitions with what it described as "funding flexibility" - a shift from Atlas Arteria's earlier stance of not pursuing equity-funded acquisitions.
IFM also points to the 2022 acquisition of Chicago Skyway as an example of "shareholder value destruction".
The purchase price of around 43 times the 2022 EBITDA is described by IFM Global as too high and likely to reduce future cash distributions to shareholders.
"Atlas Arteria has not delivered any increase in distributions over the last four years," says IFM Global in its bidder's statement.
"Atlas Arteria’s earnings quality has also deteriorated following the acquisition of Chicago Skyway as additional leverage has been utilised to support shareholder distributions."
In a March quarter update last week, Atlas Arteria reported a mixed traffic performance across its businesses was mixed during the period.
"In France, growth in heavy vehicle traffic partially offset weaker light vehicle traffic, while Chicago Skyway saw the reverse trend," said the group last week. "The Dulles Greenway and the A79 continue to perform strongly."
IFM Investors, the parent organisation of IFM Global Infrastructure Fund, is an Australian-based global institutional fund manager owned by a group of industry superannuation funds.
The infrastructure fund manages assets totalling $243 billion across transport, energy, utilities and digital infrastructure worldwide.
The takeover offer is subject to a number of conditions including European and US antitrust approvals, third-party change-of-control consents, no material adverse change, no material market fall, and no material acquisitions or disposals by Atlas Arteria during the offer period.
Atlas Arteria, which is also based in Melbourne and was formerly known as Macquarie Atlas Roads, owns and operates toll road concessions across Europe and the United States.
The group's portfolio includes the APRR motorway network in France, one of the largest toll road concessions in Europe.
The company has appointed UBS and Flagstaff as financial advisers and King & Wood Mallesons as legal adviser, and has established an Independent board committee to evaluate the offer.
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