AustralianSuper announced that it wants to buy all of the shares of Infratil Ltd (ASX: IFT).
What’s Infratil? It’s a New Zealand business which owns a number of different infrastructure investments and stakes. Some examples include telecommunication networks like Vodafone NZ, airports and electricity generators.
What was announced?
Infratil said in an ASX release that it was aware that AustralianSuper wanted to buy the whole business.
It received an initial non-binding, incomplete, indicative and confidential offer from AustralianSuper to buy the whole business for NZ$4.69 per share and 0.2210 Trustpower shares, implying a value of NZ$6.40 per share.
That offer was then revised on 27 November 2020 to increase the cash consideration to NZ$5.79.
The revised proposal confirmed by AustralianSuper yesterday implied a total offer value of NZ$7.43 per Infratil, based on a NZ$7.43 closing price per Trustpower as at 8 December 2020. The proposal is a 22.2% premium to the 8 December 2020 closing Infratil share price.
After consulting legal expert MinterEllisonRuddWatts and Goldman Sachs as financial advisors, as well as forming a committee of independent directors, the board decided to reject both proposals because they undervalued the Infratil business. Infratil also noted other aspects of the proposal were unattractive relating to Trustpower.
Infratil’s board said that it will consider any proposal to maximise shareholder value, but given the significant deficiencies in the proposal, no further engagement is planned.
IFT CEO Marko Bogoievski said: “Both proposals were unsolicited and materially undervalue our significant renewable energy and digital infrastructure platforms. We expect some of the additional value to be demonstrated in the near term with the recently announced strategic review of Tilt Renewables Ltd (ASX: TLT), which will continue, and ongoing appreciation of the value of CDC Data Centres.”
What to make of this?
I can see why AustralianSuper is interested in Infratil – it has a number of attractive, long term assets which should rising demand over the long term.
AustralianSuper may not come back with a stronger bid, the superannuation fund may only have been interested because it saw an opportunistic chance to buy some great assets. As an investor, it won’t want to pay top dollar for something.
I’d be happy as a Infratil shareholder to see the share price rising, but I wouldn’t necessarily sell today. I would be happy to hold for more of the recovery that’s likely to come.
But there are other ASX dividend shares in the infrastructure space that could cheaper ideas today such as APA Group (ASX: APA) and Sydney Airport Holdings Pty Ltd (ASX: SYD).
