Asciano's board has recommended the $9 billion Brookfield takeover

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The board of directors of logistics group Asciano today formally supported a $9 billion takeover offer from Canada’s Brookfield Infrastructure.

In a target’s statement, the ports and rail company directors urged shareholders to accept the $8.9597 per share bid, representing a 35% premium to the $6.65 price on June 30.

Asciano is trading at $8.650 today.

The statement snubs a competing bid by local Australian port operator Qube, which made an on market purchase of a 19.9% blocking stake, costing about $1.7 billion.

However, the Asciano directors note that Qube is conducting due diligence and “there remains the possibility that it will make a superior proposal”.

Qube believes a strategic combination with the Patrick Containers Terminals business within Asciano as well as a small number of assets in the bulk, automotive and general stevedoring businesses has the potential to create significant value.

Brookfield, which already has 19.33% of the company and only needs 50.1% for control, may have to extend the offer period past the January 11 deadline.

It is waiting for a ruling from the ACCC, which is concerned about competition issues over the use of rail networks.

Brookfield is working out how to meet these concerns.

With the acquisition, Brookfield would own Asciano’s Pacific National rail business. Pacific National operates on Brookfield’s rail network in WA and transports coal to Brookfield’s Dalrymple Bay Coal Terminal in central Queensland. Brookfield operates both assets under long-term leases that expire in 35 years.

Other market operators have raised strong concerns about Brookfield’s ability and incentive to favour Pacific National through its Brookfield Rail businesses.

“The ACCC is concerned that the vertical integration will lead to a substantial lessening of competition in related markets for the supply of above rail haulage services in WA and Queensland,” says chairman Rod Sims.

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