Australian watchdog raises concerns over Brookfield’s $6.5-bn Asciano takeover

The Australian Competition and Consumer Commission (ACCC) has raised serious concerns over the proposed acquisition of Australian logistics provider Asciano Ltd by Bermuda-based Brookfield Infrastructure Partners LLP for approximately A$8.9 billion ($6.5 billion), delaying a final decision on the deal until December.

Brookfield Infrastructure, a subsidiary of Canada-based asset management giant Brookfield Asset Management Inc, along with a consortium of investors, had tabled its A$9.15 a share cash-and-stock offer for Asciano in August. (See: Brookfield Asset Management to buy Australian logistics firm Asciano for $6.46 billion)

Melbourne-based Asciano, which was demerged from Toll Holdings in 2007, is a freight and logistics company specialising in bulk and container shipping and transportation with port and train operations across Australia.

ACCC considers that the acquisition, which will include Asciano's Pacific National above rail business, could significantly reduce competition.

''The ACCC is concerned that the vertical integration will lead to a substantial lessening of competition in related markets for the supply of above rail haulage services in Western Australia and Queensland,'' ACCC chairman Rod Sims said.

Pacific National operates on Brookfield's rail network in Western Australia and transports coal to Brookfield's Dalrymple Bay Coal Terminal in central Queensland.

The regulator is worried about Brookfield's ability to favour Pacific National through its Brookfield rail and coal terminal businesses.

''It's fair to say it's a red-light concern, not an amber light concern,'' Sims was quoted as saying by Sydney Morning Herald newspaper.

''Where the owner of such infrastructure vertically integrates with one of a very limited number of users of the infrastructure, then the ACCC considers that an access regime may not be capable of averting a substantial lowering of competition that would otherwise arise,'' the regulator said.

The ACCC has issued a statement of issues related to the proposed acquisition and invited further submissions from the market by 4 November.  A final decision on the deal is expected on 17 December.

Brookfield infrastructure owns and operates several energy, rail, port and hospital assets in Australia, US, UK, Europe, Canada, Chile and New Zealand.

Further to the news, shares in Asciano tumbled 8 per cent to end at A$7.88 yesterday in Sydney, which is around 14 per cent below Brookfield's offer price.