Australia's competition regulator Thursday rejected undertakings from Canada-based infrastructure fund Brookfield Partners that were designed to address concerns over its takeover bid for Australian ports and rail operator Asciano.
The takeover approach values Asciano at A$8.9 billion ($6.4 billion).
Brookfield, which has interests in freight railways in the state of Western Australia and operates the Dalrymple Bay coal terminal in Queensland, is bidding to take control of 50.1% of Asciano, whose Pacific National rail division is a major player in the coal freight market in eastern Australia.
"After detailed consultation, the ACCC has concluded that the undertakings are not acceptable and accordingly we will not be conducting third party consultation on the undertakings," Australian Competition and Consumer Commission chairman Rod Sims said in a statement.
Brookfield's undertakings to the ACCC sought to address "potential issues arising from the vertical integration of above- and below-rail assets in Western Australia and the integration of port and rail assets in Queensland," Sims said. Above-rail refers to train services and below-rail to track infrastructure.
The ACCC received a "large volume of submissions" on the proposed takeover from industry participants, which it continues to review, Sims said.
The regulator is expected to announce a final decision on December 17 on whether to allow the proposed takeover to proceed.
Asciano supports Brookfield's A$9.15/share takeover offer and said the fund would actively explore ways to address the ACCC's concerns.
The ACCC has also launched a probe into a rival A$9 billion takeover proposal for Asciano from Australian ports and logistics company Qube, which values the company at A$9.25/share.
Qube has lodged a confidential submission to the ACCC on its proposed takeover, which would split Asciano in two. It wants to retain the ports and logistics segment and hive off the rail division to its partners in the takeover bid, the Canadian Pension Plan Investment Board and Global Infrastructure Providers.
Australia-listed Qube bought up 19.9% of Asciano at end October in an effort to block Brookfield's takeover approach.
Asciano shares were trading around A$8.76/share on the Australian Securities Exchange in late afternoon trade Thursday, largely in line with the day before.
