UPDATE 3-Australia’s Transurban snubs new $3.7 bln buyout bid

* Top three shareholders offer A$5.57/share buyout

* Offer at 13% premium to Transurban’s last trade on Friday

* Transurban says offer fails to reflect growth prospects

* Top shareholder CP2 slams bid rejection, tunnel buy

* Canadian funds consider selling Transurban stakes –
source
(Adds shareholder CP2’s comments)

By Sonali Paul

MELBOURNE, May 12 (BestGrowthStock) – Australia’s Transurban Group
(TCL.AX: ) rejected a new $3.7 billion buyout offer from its top
shareholders on Wednesday saying it undervalued the toll-road
operator, a move that may lead its second and third-biggest
shareholders to sell their stakes.

Canada Pension Plan Investment Board and Ontario Teachers’
Pension Plan, which together own about 28 percent of
Transurban, have been courting the firm since November, when
their first offer at A$5.25 a share was rejected.

They teamed up with Transurban’s top shareholder,
Australian infrastructure investor CP2, to raise their offer by
6 percent to A$5.57 a share on Tuesday, a 13 percent premium to
Transurban’s last trade, after Transurban said it was buying
the Lane Cove Tunnel in Sydney and would fund the deal with a
share sale.

The three shareholders opposed Transurban’s plan to raise
A$542 million with the share sale, but in a last ditch bid to
win over the board, made another offer early on Wednesday at
A$5.42 a share if Transurban wanted to go ahead with the share
sale.

Transurban said no to both offers, saying they were cheap
and uncertain.

“The board has great confidence in Transurban’s outlook and
prospects,” it said in a statement.

Transurban last traded at A$4.92 a share on Friday before
trading was halted as it moved ahead with its share sale.

The rejection of the offer drew sharp criticism from CP2.

“No stakeholders benefit from shutting the door in our
face,” Peter Doherty, managing director of CP2, which owns 14.5
percent of Transurban, told Reuters.

CP2 lambasted Transurban for rejecting the A$5.57 a share
buyout offer while selling new shares at A$4.60 this week, and
for paying too much for the Lane Cove Tunnel.

CP2 plans to remain a shareholder and says would be more
active in expressing its views to the board.

“This company’s share price preformance under this
governance regime is woeful, and it must change,” Doherty said.

CP2 joined the buyout bid, which would give the two
Canadian funds 40 percent each and CP2 a 20 percent stake,
because it believes its infrastructure assets are not being
valued properly in the share market and feels Transurban should
work more closely with infrastructure investment experts at CP2
and the Canadian funds.

WALKING AWAY?

A source close to the bidders said the Canadian funds may
now want to sell their stakes, as Ontario Teachers’ Pension
Plan did last October when it was unhappy with Macquarie
Infrastructure Group’s plans to split into two listed groups.

“The bidders are seriously considering their respective
positions in Transurban,” the source, who did not want to be
named because of the sensitivity of the matter, said.

“They certainly have a history of exiting positions in
situations in which they believe the best interests of their
investments will be better served in an unlisted environment.”

An investor said that the Canadian funds appeared very keen
to buy out Transurban and could still come back with another
offer, with Transurban having left the door open to working
with its top three shareholders.

“People might speculate that means if Transurban plays
their cards right they might get a higher offer out of them,”
said Will Seddon, an analyst at White Funds Management, which
holds some Transurban shares.

“But probably the initial response will be there’s a risk
that at least one of the parties will walk away and put a bit
of an overhang on the shares.”

Stock Investing
(Editing by Muralikumar Anantharaman)

UPDATE 3-Australia’s Transurban snubs new $3.7 bln buyout bid