EastLink auction speeds past ACCC pit stop; data room set to open
The owners of a 55.45 per cent stake in Melbourne toll road EastLink are ready to launch the mooted auction, after the auction’s big gorilla, Transurban, was handed a speeding ticket by the competition regulator on its ability to bid.
Owners of EastLink will collect first-round bids in late November.
Street Talk understands prospective bidders were asked to sign non-disclosure agreements last week, ahead of the auction officially kicking off after nearly 10 months of preparations.
They were offered the toll road’s traffic data upon signing, with access to detailed vendor due diligence to follow when the data room opens on October 16. Sell-side adviser RBC Capital Markets is expected to call for non-binding indicative bids in late November.
An early look at the numbers for the last financial year put EastLink’s EBITDA at just over $300 million and debt at $2.5 billion on a 100 per cent basis, sources said.
Transurban is lying low for now following public concerns from the Australian Competition and Consumer Commission on September 21.
The regulator took the view that allowing the ASX-listed toll roads giant to own a stake in EastLink would “substantially lessen” competition for concessions in Victoria. It was the first time that Transurban – which has relied on M&A to expand its holdings to 11 Australian toll roads – faced pushback from the competition regulator on acquiring a local road.
It responded with a statement saying the ACCC decision was an informal merger clearance and “not a conclusive finding of law”.
The road not taken (over)
It is understood Transurban hasn’t decided if it will appeal ACCC’s decision. Sources said while it could, technically, still lob an indicative bid at EastLink come November, it was unlikely to throw itself in the auction with a prospective ACCC challenge hanging over its neck.
As things stood on Sunday, Transurban was as good as dead in the auction – at least for now. Which begs the question: will Transurban release its advisory lineup – Macquarie Capital, Morgan Stanley, Barrenjoey and Azure Capital – from their mandates?
Should Transurban withdraw from the auction as expected, it would significantly broaden the field of suitors willing to take a punt at EastLink. And these suitors would need advisory talent, a big chunk of which is handcuffed to Transurban.
Street Talk previously reported Spain’s largest toll road operator, Abertis Infraestructuras, has hired Citi and JPMorgan for its tilt. QIC, IFM Investors and DIF Capital Partners have been spotted around EastLink, and have until late November to make up their minds.
ASX-listed Atlas Arteria, which publicly ruled out bidding for EastLink in February, reaffirmed on Sunday evening that it did not plan to participate.
Horizon Roads owns ConnectEast, which owns the EastLink toll road that stretches 39 kilometres and connects Melbourne to the Mornington Peninsula. Its shareholders include APG, South Korea’s National Pension Service, NZ Superannuation Fund, CIC, Teachers Insurance and Annuity Associate of America, Britain’s Universities Superannuation Scheme, Denmark’s ATP, Mirae, CP2 and Terdot.
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