Atlas Arteria buys $3bn Chicago Skyway stake despite IFM’s threats over ‘dilutive’ bid
Atlas Arteria has defied threats of legal action, including a potential board spill motion, by its biggest shareholder to lock in a near-$3bn deal for a controlling stake in Chicago Skyway.
Atlas Arteria has locked horns with its major shareholder – and potential buyer – IFM Investors by proceeding with a near-$3bn deal to buy a two-thirds stake in Chicago Skyway, defying legal threats and a potential board spill.
Atlas Arteria said on Tuesday it had agreed to buy a controlling stake in the 12.5km toll road with 81 years of remaining concession life for $US2.1bn ($2.9bn).
Ontario Teachers’ Pension Plan retains a 33.33 per cent stake.
The deal is subject to regulatory approvals, including from the City of Chicago, and will also need funding, which is being arranged through an equity capital raising.
The announcement has raised the ire of 19 per cent shareholder IFM Investors, which walked away from a potential $8bn takeover in late July over limited access to financial information.
Speculation about Atlas being in the race for the US deal first aired in August after which IFM wrote to the company about its belief the deal was “highly dilutive to distributions (potentially up to 20 per cent dilutive)” and that its reservations were shared by other major shareholders of Atlas.
A meeting on August 31 “clearly represented” that the company would not make an investment that was dilutive to distributions.
IFM Investors – owned by industry superannuation funds and the principal adviser for the IFM Global Infrastructure Fund – threatened legal action in a subsequent letter on Monday, after IFM confirmed media speculation about an imminent deal.
“An acquisition of Chicago Skyway at the likely sale price would be highly dilutive and pursuit of it would, therefore, be directly contradictory to your comments (made on August 31), the second salvo on Monday stated,” it wrote in a letter to Atlas Arteria.
“We do not believe the company could construct any credible set of parameters or assumptions in order to justify the pursuit of the Chicago Skyway acquisition.
“It is clear that the company does not have the support of its major shareholders, IFM GIF included, in relation to the pursuit of a large equity funded acquisition, if that acquisition would be dilutive or otherwise destroy shareholder value,” the letter reads.
“If the company continues with this course of action, IFM GIF will consider all legal options available to it, including seeking an accelerated board transition by way of an (extraordinary general meeting), to protect its interests as a shareholder of the company.
“We expect Atlas Arteria shareholders to strongly support IFM GIF in pursuit of these options, particularly in the context of the company continuing to progress large equity funded offshore acquisitions such as Chicago Skyway, and the fact that the company should be focused on funding and creating value from its existing asset portfolio.”
On Tuesday, an IFM spokesman said: “We are disappointed with the decision by Atlas Arteria to proceed with the acquisition of Chicago Skyway, and as a major shareholder we are considering our options”.
RBC Capital Markets and UBS are acting as financial advisers to Atlas Arteria with both also joint lead managers, bookrunners and underwriters in relation to an equity raising, details of which are being finalised.
Atlas Arteria, which remains in a trading halt, last traded at $7.81. They have risen 12.9 per cent, or 89c, since December 31.
What next for ABC tower block?
The ABC will move its Adelaide studios into the CBD and sell its Collinswood tower, bringing to an end more than 50 years of broadcasting at the landmark site.
Star boss failed to tell board of China cards cancellation
Former Star Entertainment chief executive Matt Bekier failed to inform his board that the casino operator had cancelled the use of China Union Pay cards in 2020, a court has been told.