IFM bid undercuts Atlas Arteria value by $1bn: Independent expert

Atlas Arteria's appointed independent expert Kroll has concluded the hostile takeover offer by IFM Investors is "neither fair nor reasonable".

Kroll said the offer price for Atlas Arteria should be between $5.39 to $6.20 per security - valuing the global toll operator at minimum around $7.8 billion, which is a $1 billion short of what the bid values the firm. On the upper end, Kroll values the firm at around $9 billion.

"As both the offer price of $4.75 and the maximum consideration of $5.1 fall below our assessed value range for an ALX security, the offer is not fair," Kroll said.

Atlas Arteria has hence told shareholders to reject the offer.

IFM Investors had launched a hostile takeover bid for Atlas Arteria in late April, stating the action was spurred by continued underperformance from Atlas Arteria, and a significant change in strategy to pursue more mergers and acquisitions (M&A). IFM already owns a 34.5% stake in Atlas Arteria through its wholly owned subsidiary Diamond Infraco 1.

The toll road operator called the bid "too low, opportunistic and highly conditional" and asked shareholders to simply ignore all correspondence from IFM.

In its takeover bid, IFM pointed to Atlas Arteria's acquisition of the Chicago Skyway in 2022 - after which Atlas Arteria said it would not be pursuing further M&A, other than growth opportunities directly related to, or in proximity of, the existing business.

"The bidder wished to avoid a repeat of what it regards as the shareholder value destruction associated with the Chicago Skyway acquisition in 2022," IFM said.

Atlas Arteria had said prior to the takeover bid it was actively considering its holdings in Chicago Skyway and had issued a notice to Ontario Teachers' Pension Plan (OTPP), the other major shareholder in Chicago Skyway, to sell its stake.

OTPP did not accept the notice which expired on May 22, which allows Atlas Arteria to consummate a transfer of its entire stake to a third party. It intends to explore a sale of its 66.67% stake to a third party to maximise value for securityholders.

Both IFM and Atlas Arteria have taken the dispute to the Australian Takeover Panel.