Canada Pension Plan Investment Board offered A$3.47 billion (US$3.1 billion) for Intoll Group in its second attempt to buy an Australian toll-road operator in eight months. Intoll shares surged on the bid.
The CPPIB, which oversees a total of C$123.9 billion (US$119 billion) in assets, bid A$1.535 for each Intoll share, 42 cents more than Wednesday’s closing price, Macquarie Group-backed Intoll said in a statement Thursday. Intoll, whose shares jumped 30% to close at A$1.45 in Sydney, gave the bidder three weeks to carry out due diligence.
“The price looks good relative to Intoll's recent share price, but it still undervalues the stock,” said Will Seddon, who helps oversee A$350 million at White Funds Management in Sydney. “If another bid doesn't come in, and we think there's a decent chance it will, then it's going to come back to Intoll's investors and what their perception of value is.”
Canada Pension Plan's joint A$6.6 billion offer for toll-road operator Transurban Group in November and a revised bid in May collapsed after the approach was rejected and co-bidder Ontario Teachers' Pension Plan sold out. Canada Pension Plan is seeking to match long-term liabilities with assets set to deliver steady returns in economies that weathered the global recession.
“We believe Intoll's toll-road assets are a good fit with CPPIB's portfolio and long-term investment mandate and are well-situated strategically to benefit from future urban growth in Toronto and Sydney,” Andre Bourbonnais, senior vice president of private investments at the pension fund, said in an e-mailed statement.