Transurban road firm may take aim at rival Michael Bennet From: The Australian November 27, 2010 12:00AM Increase Text SizeDecrease Text SizePrintEmail Share Add to DiggAdd to del.icio.usAdd to FacebookAdd to KwoffAdd to MyspaceAdd to NewsvineWhat are these?TRANSURBAN could make a move on toll road rival ConnectEast. The speculation follows the Queensland government's decision to keep its toll roads public, according to analysts.
Despite the success of its $4.6 billion float of its railways this week via QR National, Anna Bligh's government this week opted to sell Queensland Motorways for $3bn to the state's investment arm rather than privatise it via initial public offering or trade sale.
UBS analysts thought Transurban could have been interested in QML, but with it off the sale block the company could turn its attention to boost its exposure in Victoria via a takeover of ConnectEast, which owns and operates EastLink in Melbourne.
"With QML out of the picture, Transurban bidding for ConnectEast is on balance more likely in the medium term," said analyst Han Xu, adding that progress on development of the Western and Northern links could be key catalysts.
Start of sidebar. Skip to end of sidebar. Related CoverageCP2 takes 'boring' road to growth The Australian, 1 Jun 2010 Transurban interest in north The Australian, 26 Mar 2010 Road raiders may return Herald Sun, 6 Nov 2009 Road rorts taking their toll Daily Telegraph, 12 Oct 2009 For whom the roads toll The Australian, 12 Oct 2009 .End of sidebar. Return to start of sidebar. Transurban owns 100 per cent of CityLink in Melbourne and wholly owns or has stakes in Sydney toll roads Hills M2, WestLinkM7, the Eastern and M5 Motorway.
UBS, which expects a pick-up in merger and acquisition activity in the infrastructure sector, said Transurban could have looked at QML to get into the Brisbane market. But Mr Xu said Transurban was not as interested in Queensland's smaller toll road players such as publicly listed Rivercity Motorway and Brisconnections, meaning ConnectEast could be on the cards.
ConnectEast closed 0.5c higher at 43.5c, giving it a market value of about $1.7bn, compared with Transurban's $7.4bn.
ConnectEast's major shareholders are Guardians of NZ, Lazard, Commonwealth Bank, Suncorp-Metway and Leighton.
At the end of June, Transurban had about $681 million in cash facilities, meaning it would need another equity raising after this year's $540m issue or more debt to make a bid.
Mr Xu also said Transurban would benefit from organic growth in the medium term from brownfield upgrades to projects.
UBS expects up to $3bn of potential toll road deals towards 2013 as conditions align for a pick-up in activity.
Transurban yesterday closed 10c higher at $5.15.
CEU Price at posting:
43.5¢ Sentiment: Hold Disclosure: Held
