Australian ports firm Asciano Group reports $2.7 bln takeover bid

Shipping containers at Port Botany in Sydney. Australia's biggest ports and rail operator Asciano Group has rejected a 2.9 billion Australian dollar (2.7 billion US) takeover bid, saying it undervalued the company.

Australia's biggest ports and rail operator Asciano Group on Monday rejected a 2.9 billion Australian (2.7 billion US) dollar takeover bid, saying it undervalued the company.

The joint bid by TPG Capital and Global Infrastructure Partners offered 4.40 dollars cash per security or a scrip alternative of unlisted securities in a bidding company, Asciano said in a statement.

The company's directors believed the proposal undervalues the business and have decided not to agree to due diligence, Asciano said in a statement after the close of trading.

Satisfactory completion of due diligence was a precondition to the consortium making a final binding proposal, the company said.

Asciano shares rose some 19 percent to 4.92 dollars at one stage Monday before closing 68 cents higher at 4.82.

US-based TPG is one of the world's largest private equity investment firms while Global Infrastructure Partners was formed by Credit Suisse Group and General Electric Co.

Austock infrastructure analyst Andrew Chambers said in a note to clients that the approach was a low-balled bid that significantly undervalues Asciano.

He said the bid had been prompted by recent weakness in Asciano's price, driven partly by fear over its debt levels and a downgrade to its earnings guidance.

Since its demerger in June 2007 from transport and logistics parent Toll Holdings Ltd., Asciano shares have fallen up to 77 percent to a record low of 2.68 in July.

Given all the noise around Asciano, many market participants have largely forgotten the strategic positioning and value of Asciano's asset base and hence allowed the stock to trade down to levels well below fair value, said Chambers.

Asciano operates container ports in Melbourne, Sydney, Brisbane and Fremantle, and auto, bulk and general cargo services across more than 30 ports in Australia and New Zealand.

It is also a dominant provider of coal and grain haulage and transports other bulk commodities through its Australia-wide Pacific National rail freight business.