IFM Investors makes $7bn bid for Atlas Arteria

IFM Investors has launched a hostile takeover bid for Atlas Arteria, valuing the toll road operator at around $7 billion.

The bid was launched by Diamond Infraco 1, a wholly owned subsidiary of the IFM Global Infrastructure Fund, which already holds a 34.48% stake in Atlas Arteria, with a further 1.21% stake held by or on behalf of clients of IFM Investors.

IFM has issued a bidder's statement, spurred by continued underperformance from Atlas Arteria, and a significant change in strategy to pursue more mergers and acquisitions (M&A).

"Atlas Arteria has underperformed in terms of total shareholder return relative to global listed infrastructure and other market indices," the statement said.

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," it said.

It warned shareholders who do not accept IFM's offer could risk continued underperformance.

IFM said it has made it known to the Atlas Arteria board and management it has "strong concerns" about the recent change in strategic direction to pursue M&A more broadly.

"Atlas Arteria has recently indicated that it is actively looking at new M&A opportunities with funding flexibility. This is a material change from Atlas Arteria's previous position, which explicitly ruled out equity funding in relation to new opportunities," the statement said.

"Bidder is also concerned that management's attention will be diverted from addressing critical operational and strategic issues across its existing portfolio.

"If Atlas Arteria continues with this change in strategy, there is a risk that further acquisitions by Atlas Arteria may not enhance shareholder value, and that management's attention will be increasingly diverted from addressing those existing issues."

The offer is subject to several conditions including a requiring a waiver of third-party rights on a change of control under material agreements, that there is no material market fall and that there is no material acquisitions or disposals prior to the end of the offer period.