Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan, both of Toronto, are unlikely to raise their spurned A$7.2 billion ($6.4 billion) bid for Australian toll-road operator Transurban Group, analysts said.
The funds and Sydney-based fund manager CP2 Ltd. on Tuesday sweetened their bid to A$5.57 a share, 28% more than the closing share price before an original November offer. They are unlikely to increase that further or make a hostile takeover, said analysts at Macquarie Group, Royal Bank of Scotland Group and Southern Cross Equities.
“They want to leave some money on the table for their own shareholders,” said Sanjay Magotra, a Sydney-based infrastructure analyst at Southern Cross, which rates the stock as “reduce.” “The Canadians and CP2 don't have to return with a revised offer because they're long-term investors and they can sit on the sidelines for 12 months, a year, two years, until it drifts back to where it creates a return.”
The three groups, which already own a combined 42.4% of Transurban, are vying for control of assets including the Pocahontas state Route 895 in Richmond, Va., and four Sydney toll roads, as they seek long-term income to match their future payouts. Upon rejecting their proposal, Transurban said it plans to go ahead with an A$542.3 million share sale to help fund its acquisition of the Sydney Lane Cove Tunnel.
Ontario Teachers' CEO James Leech declined to comment Wednesday on Transurban following a speech in Toronto. CPP spokeswoman Linda Sims said the retirement fund manager isn't commenting.