IFM Investors has secured more than 60 per cent ownership of Atlas Arteria as its $7.4 billion hostile takeover bid draws to a close and the global investment group prepares to overhaul the toll road company’s management of the Chicago Skyway.
IFM is expected to announce to the market on Monday that investors holding a total well above 60 per cent of the toll road group’s stock have accepted the group’s offer of $5.10 a share in cash.
Atlas Arteria’s board last week continued to urge shareholders to reject the takeover proposal, which closes on Tuesday evening.
Deriving more value from the Chicago Skyway toll road will be a top priority for IFM, which manages $268 billion in assets and has more than 800 clients globally, including Australian and North American pension funds.
IFM has been unhappy with Atlas Arteria’s decision to agree to a poison pill arrangement with a Canadian pension fund when the toll road company bought a two-thirds shareholding in the Skyway for $2.9 billion in 2022.
The arrangement gives the Ontario Teachers’ Pension Plan, which owns the remaining one-third of the Skyway, the rights to sell its holdings to Atlas Arteria at a 7.5 per cent premium to fair market value if there is a change of control at the Australian toll road group.
To remove uncertainty over the Canadian pension fund’s intentions after IFM last week finally got control of Atlas Arteria after four years of pursuit, the toll road company decided to pay Ontario Teachers $US100 million ($145 million) to scrap the poison pill. Half of that $US100 million has already been paid.
But IFM has criticised Atlas Arteria’s decision to fork out the cash, last week telling investors that the toll road group’s directors “did not engage” with the investment group to discuss other options.
IFM told investors in its most recent bidder’s statement that it had been willing to help secure funding for the cost of buying Ontario Teachers’ stake, worth more than $1 billion, if the Canadians had decided to exercise the poison pill.
The asset manager also wanted Atlas Arteria to renegotiate the $US100 million settlement and create a call option, according to the toll road company’s most recent target statement. This would give Atlas Arteria the right to buy Ontario Teachers’ stake in the Chicago Skyway at an exercise price of $US1 billion.
IFM owns another US motorway, the Indiana Toll Road, that connects with the Chicago Skyway. It has invested more than $US600 million in the Indiana Toll Road over the past decade and believes it can improve the profitability of the Chicago Skyway.
IFM suggested that the call option be exercised when the takeover bid closes, or shortly afterwards, and that Atlas Arteria buy the rest of the Chicago Skyway using a non-renounceable equity raising.
But Atlas Arteria said it had rejected IFM’s suggestions, claiming that the asset manager did not provide an alternative funding proposal and that it was cheaper to pay $US100 million to Ontario Teachers than buy the remainder of the Chicago Skyway.
A non-renounceable equity raising – which stops investors trading their share purchase rights on the market if they do not want more stock – would also dilute shareholders who did not want to participate, Atlas said.
IFM intends to do a full strategic review of Atlas Arteria. But it will have to work within an existing corporate governance agreement that requires Atlas Arteria’s chairman to be independent – unless it pushes the company to alter the agreement.
Atlas Arteria’s current chairwoman, Debbie Goodin, has already stated that she will step down on Tuesday. The company is searching for a new non-executive chairman.
Source: https://www.afr.com/companies/infrastructure/ifm-wins-more-than-60pc-of-atlas-as-takeover-bid-nears-finish-line-20260702-p60c18