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Toll road operator Transurban (ASX: TCL) today announced it will spend $11.1 billion to acquire the remaining 49 per cent equity stake that it doesn’t already own in the New South Wales Government’s WestConnex road project.
To support the acquisition, which will take the circa 70-kilometre road network out of the public’s hands, Transurban will raise $4.22 billion of new equity.
“WestConnex is one of the largest road infrastructure projects in the world with an enterprise value of $33 billion based on this transaction,” Transurban CEO Scott Charlton said.
“WestConnex is a key component of the NSW Government’s integrated transport plan to ease congestion and connect communities in Sydney.
“We feel privileged to take Sydney Transport Partners’ holding in this critical asset to 100 per cent. This transaction is expected to support free cash growth and distributions for Transurban security holders for the life of the concession.”
The acquisition of WestConnex, which is expected to save commuters approximately 40 minutes of travel time between Parramatta and Sydney Airport on completion, will take Transurban subsidiary Sydney Transport Partners’ (STP) ownership of the project to 100 per cent.
Transurban currently owns 50 per cent of STP alongside strategic partners including new partner Cassie de dépôt et placement du Québec (CDPQ).
The toll operator expects to receive more than $600 million until FY25 resulting from its increased stake in WestConnect, in addition to more than $2 billion expected to be achieved between FY21 and FY25 from a number of assets across Transurban.
The acquisition is expected to be completed in October, and the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB) have confirmed that they have no opposition to the deal.
Construction of WestConnex is nearing completion, with the M4 and M8 segments of the project now fully operational, and continued progress is being made on the M4-M5 Link.
Transurban currently provides the road project with operational services under a Master Services Agreement, with WestConnex utilising centralised Transurban customer and corporate systems.
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