|Friday 31 August 2012Proposed takeover offer for AIXAustralian Infrastructure Fund (AIX) announced on Friday 24thof August that it has received a proposed takeover offer from the Future Fund Board of Guardians (Future Fund) to acquire all of its assets for cash. This includes AIX’s interests in Perth Airport, Australian Pacific Airports Corporation (Melbourne Airport), Queensland Airports, HTAC, NT Airports and Statewide Roads.The indicative offer price equates to approximately $3.22 per stapled security which, together with the residual cash held by AIX after allowing for any taxes, payments to the Hastings Group for management and performance fees, transaction related costs and residual liabilities of AIX, is intended to be distributed to shareholders.
As at 30 August 2012, the stock price closed at $3.08 per share which represents approximately a 4 percent discount to the potential offer price.
Existing shareholders can:
Take no action.
There is still approximately 4 percent upside to the takeover price of $3.22 plus any potential cash distribution. The key risk to continuing to hold is that the acquisition does not proceed and as a result the price decreases.
The JBWere Investment Strategy Group (ISG) believes that AIX continues to offer shareholders a defensive yield profile in an uncertain investment environment with the potential for further share price appreciation and additional distributions should the takeover proceed.
Sell your holding on market.
Selling would allow current holders to realise any gain made and switch into alternative investments immediately. A sale at this point would forgo any further upside in share price to $3.22 as well as incur transaction costs. Selling will also eliminate any potential upside from the entry of a competitive bid from another party and any further cash distributions made by AIX.
Shareholders should consider their own personal circumstances when making any decision regarding their holding in AIX.
Australian Infrastructure Fund (AIX) – Neutral Recommendation from Goldman Sachs
Goldman Sachs (GS) currently has a neutral recommendation on the Australian Infrastructure Fund. In Goldman Sachs‘ view, the offer price of A$3.22/security highlights the appeal of infrastructure assets to superannuation/pensions funds and their willingness to assign greater value to this class of investment than other investors (Particularly those with mandate which restrict them to listed securities). Following the takeover offer announcement from the Future Fund, AIX has experienced a significant rerating. While there is still the risk that the proposal will not proceed the stock has shown substantial outperformance over the last 12 months.
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