Exclusive: Qatar, China in $6.4 billion battle for Australian freight giant

SYDNEY (Reuters) - Canada's Brookfield Asset Management BAMa.TO is planning a fresh $6.4 billion bid for Australian port and rail firm Asciano AIO.AX with Qatar's sovereign fund, two sources told Reuters, widening the global battle for the haulage heavyweight.

Brookfield Infrastructure Chief Executive Sam Pollock (R) shakes hands with Asciano Ltd Chief Executive Officer (CEO) John Mullen after a media conference in Sydney, Australia, August 18, 2015. REUTERS/David Gray

The willingness of Brookfield to raise its offer and Qatar Investment Authority’s (QIA) entry as a potential co-investor underscore the immense appetite for Australian infrastructure, especially mining-exposed companies whose share prices have been battered by the commodities downturn.

Asciano, which had a market capitalization of $4.3 billion a year ago, said on Tuesday it was dumping Brookfield's initial offer of A$8.9 billion ($6.3 billion) in favor of a A$9 billion bid from Australian freight rival Qube Holdings Ltd QUB.AX in concert with China Investment Corp [CIC.UL].

But the sources, who are close to the deal, said the Canadian infrastructure investor would join the Qataris and Canadian pension fund PSP Investments and raise its offer to A$9.05 billion as early as Thursday. The sources asked not to be identified because of the sensitivity of the matter.

Brookfield always intended to allow its original binding offer to lapse by a Feb. 17 deadline, they added, so that it could launch a higher cash offer with new partners.

It stood by a Feb. 7 letter it wrote to Asciano saying it planned to raise its offer from A$9.10 per share to A$9.28, the sources said.

Asciano and Qube declined comment and Brookfield had no official comment. QIA was not immediately available for comment.

The deal would be QIA’s first in Australia. The fund has been busy buying assets around the world, including a 44 percent stake in a $4.5 billion Brookfield property development in Manhattan last year.

Its emergence as a potential co-investor could add a new dimension of scrutiny from Australia’s Foreign Investment Review Board (FIRB). Qube also could face political headwinds due to the Chinese government interests backing its takeover offer.

A FIRB spokesman said its assessments of whether deals were in the national interest were applied consistently “regardless of the country of origin of the investor”.

Qube is being advised by UBS and Credit Suisse, while Citi and Barclays is advising Brookfield.

Brookfield has lined up a A$1.9 billion loan underwritten by ANZ, Barclays, Citi, Deutsche Bank and HSBC.

($1 = 1.4081 Australian dollars)

Reporting by Byron Kaye, Swati Pandey and Sharon Klyne; Editing by G Crosse and Stephen Coates