How Qube and UBS pushed Macquarie’s $9.2bn bid higher

Qube owns the Patrick terminals business with Brookfield - one of the most valuable terminals businesses in Australia. Picture: Supplied

Qube Holdings and its adviser, UBS, managed to extract more than an additional $400m out of Macquarie Asset Management for a bid for the logistics services provider as part of negotiations that spanned about two months, say sources.

Macquarie Asset Management first knocked on the door of Qube Holdings around September, with sources reporting its initial offer was just below $5 per share, or $8.8bn.

After talks between both parties got under way and some limited due diligence was carried out, Qube on Monday announced a $5.20 per share proposal from Macquarie Asset Management, valuing the target at $9.2bn or including debt, $11.6bn.

The offer comes at a time that Qube’s share price trades at record highs and is a 27.8 per cent premium to the last traded share price of $4.07.

Should the proposal be successful, it means another top Australian group leaves the ASX, with Qube’s rival, Aurizon, being the only major logistics provider publicly trading.

Qube has operations spanning over Australia, New Zealand and South East Asia and is the country’s largest integrated import and export services provider, with its two main units of business being Qube Logistics, which is its container terminal operation, and Qube Ports and Bulk, which is its Patrick Terminals operation.

DataRoom understands that one of the motivating factors for Macquarie Asset Management to buy the business was that it was flush with cash that needed to be put to work.

This was following its $US40bn ($61bn) sale of its Aligned Data Centre business in early October to a consortium including Nvidia, Microsoft and Larry Fink’s BlackRock in what was a record for a data centre deal.

Macquarie owned the business with backers including the Kuwait Investment Authority, Temasek and BlackRock Global Infrastructure Partners.

The latest offer by Macquarie for Qube came after provisional due diligence and Qube has recommend the offer rather than holding out for more money.

Macquarie Asset Management has been granted six weeks of exclusive due diligence to carry out on the target.

Qube, itself, has been scouting the market for opportunities to embark on a buyout of a meaningful size, but there were limited opportunities in the Australian and New Zealand markets of meaningful scale, say well informed sources.

In terms of interlopers, Brookfield may take a look, but many in the market believe it is a done deal with Macquarie.

DataRoom understands Macquarie will bring in co-investors to fund the transaction, but it is expected to be funds that already invest with the Australian listed financial group like Aware Super, which partnered with Macquarie buying the telecommunication provider Vocus Group for $3.5bn.

Analysts at RBC say that the deal values Qube at 14.4 times its earnings before interest, tax, depreciation and amortisation including its debt.

Brookfield and Qube jointly own the Patrick terminals business, which is valued at $5.59bn.

Excluding the Patrick business, Macquarie is paying a 45 per cent premium to the last closing price.