Transurban is paying half price for Queensland's AirportlinkM7 toll road

Glenn Hunt/Getty Images

Transurban is buying the AirportlinkM7 toll road in Brisbane for $1.87 billion, about half what it cost to build three years ago.

The toll road operator is also raising $1.025 billion in a rights issue to pay for the acquisition and to reduce debt.

The whole deal, after paying $108 million stamp duty, plus $23 million in transaction costs, will cost an a little more than $2 billion.

The purchase of the toll road, a tunnel connecting Brisbane Airport with Brisbane’s CBD and northern, southern and western suburbs, is being done through Transurban Queensland which is 62.5% owned by the Transurban group. The other shareholders are AustralianSuper and Tawreed Investments.

Transurban’s Brisbane network.

Transurban CEO Scott Charlton says the acquisition enhances Transurban Queensland’s existing network position in Brisbane.

“AirportlinkM7 is a quality urban asset with observed traffic history and substantial additional capacity,” he says.

The toll road is 6.7 km in length, cost $3.7 billion to build, and opened to traffic in July 2012. In 2015, it brought in $83 million in revenue.

To help pay for the acquisition, Transurban announced a 1 for 18 rights issue to raise $1.025 billion at $9.60 a share, a 4.9% discount to yesterday’s $10.10 close.

Transurban, a top 20 ASX listed company with market cap of about $19 billion, operates toll roads including Sydney’s Lane Cove Tunnel – which Transurban bought for $630 million in 2010, three years after the $1.1 billion build sent the developer into receivership – and Melbourne’s CityLink.

A short time ago, Transurban was trading at $10.32.

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