Aurizon considering merger with Qube, and a joint purchase of GrainCorp

 
  Sulla1 Chief Commissioner

Reports that came out of the Australian yesterday suggest Aurizon and Qube are mulling a merger, with Qube likely to be the leading partner. Aurizon has also been considering a joint purchase of GrainCorp with CBH.

https://hotcopper.com.au/threads/azj-gnc-merger-speculation.6230679/?fbclid=IwAR0Y4fKnNrRz0ZYXtZ89ARmDuvj5NZ3w5PbFdoLD0UvVaK6YMOuX6JxW7LA

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  GT46C-ACe Deputy Commissioner

Location: Gold Coast QLD
Just add some Qube silver to those bananas...
  8502 Chief Train Controller

This country really is in bad shape when you consider the rail network is falling apart and we need challengers in the space not a larger and larger monopoly.  Aurizon has already stuffed their intermodal and their customers once.  They have also lost grain business to new start-up operators in Queensland.

Aurizon cannot retain business.
  james.au Minister for Railways

Location: Sydney, NSW
Also in the coverage is that Aurizon is looking at OneRail as a target.  As are Qube and PN.

Going to be an interesting ACCC review regardless of who takes it over.

In this one I'd be preferring that the below rail goes to ARTC to be honest and that the above rail converts to the standard competitive practice elsewhere.  The ARTC owns the track up to Adelaide anyway.  This route has the benefit of distance and I'm not sure a monopolist structure like the GWA/ORA is required.  The construction losses have been taken already.
  james.au Minister for Railways

Location: Sydney, NSW
Full article from the Australian

The nation’s largest freight rail company, Aurizon, has had a busy year behind the scenes examining possible acquisition opportunities, and it is understood one of them is GrainCorp.

The $1.4bn GrainCorp is the nation’s largest grain handler, operating across the east coast.

This month it upgraded its 2021 financial year net profit guidance to between $125m and $140m on the back of favourable weather conditions, bouncing back from one of the country’s worst droughts on record.

DataRoom understands that the $7.4bn Aurizon mulled an acquisition in partnership with West Australian grain growing co-operative CBH Group.

The understanding was that Aurizon was to manage GrainCorp’s infrastructure while CBH would handle the operational side of the business.

GrainCorp has seven ports on the east coast and a joint venture port under construction in Vancouver, Canada.
CBH has had interest in moving to the east coast in the past but was blocked by its stakeholders and has since been moving to take costs out of its supply chain.

However, on the agenda for Aurizon is a potential acquisition of the One Rail Australia business, formerly known as Genesee & Wyoming Australia, which has been placed on the market by Macquarie Infrastructure and Real Assets.

The business has been on the market for some time through Credit Suisse and Macquarie Capital and it is understood Aurizon’s interest centres on at least the non-coal haulage operation and potentially the coal haulage assets that are being offloaded separately.

The non-coal-related unit generates about $220m in annual revenue and more than $100m in earnings before interest, tax, depreciation and amortisation and it may be worth about $1bn.

On offer are 2500km of rail tracks between South Australia and the Northern Territory, along with intermodal and bulk haulage operations with customers such as Toll, Linfox and Coles.

Aurizon, Qube and Pacific National are believed to be among the parties competing for the non-coal business, which is yet to call for formal bids.

Some also question whether Qube could be in its sights for a potential merger transaction, although Aurizon says no talks have taken place with its rival.

Qube counts as its chairman Allan Davies, who previously worked with Aurizon boss Andrew Harding when both were coalmining general managers at Rio Tinto.

An acquisition of its $5.7bn rival could be one way to reduce its exposure to coal operations proportionately.
Others believe Qube would be spearheading a deal, given it is debt-free with $800m of cash on its balance sheet following recent asset sales.

Yet most believe investors would not want Aurizon’s exposure to coal haulage. Qube reports its results next Thursday.
  bingley hall Minister for Railways

Location: Last train to Skaville
Also in the coverage is that Aurizon is looking at OneRail as a target.  As are Qube and PN.

Going to be an interesting ACCC review regardless of who takes it over.

In this one I'd be preferring that the below rail goes to ARTC to be honest and that the above rail converts to the standard competitive practice elsewhere.  The ARTC owns the track up to Adelaide anyway.  This route has the benefit of distance and I'm not sure a monopolist structure like the GWA/ORA is required.  The construction losses have been taken already.
james.au

The only active track that One Rail 'owns' is the 60km islolated narrow gauge line between Kevin and Thevenard, and the long term lease it has over the Tarcoola to Darwin railway. Adelaide to Tarcoola is part of the existing ARTC network.
  bingley hall Minister for Railways

Location: Last train to Skaville
Thanks for posting the full article james.

The journo seems to have had a bad attack of the "names sweetie, names.....", mention every potential player and deal and he's bound to get 50% of it right.

It is certainly a tangled web being weaved.

If Aurizon were to purchase GrainCorp it would then create difficulties, not insurmountable, if it were merge with QUBE given QUBE's existing involvement in the train logistics business including it's recent purchase of Agrigrain.

I think any purchase or merger deal between Aurizon and QUBE is highly speculative.

As for the ORA sale - QUBE could purchase the business outright with no major issues, whereas even if Aurizon or PN wanted to they would fail scrutiny from the ACCC on the coal business.

Anyone who wants to buy the ORA non coal business needs to do some serious due diligence.  Journos may swallow the "customers such Toll, Linfox and Coles" spin, but it actually amounts to bugger all. Container traffic on the Darwin line is a shadow of its former self and revenues are propped up by copper and iron ore traffics. The iron price is taking another dive so even those revenues are flakey.
  bevans Site Admin

Location: Melbourne, Australia
Also in the coverage is that Aurizon is looking at OneRail as a target.  As are Qube and PN.

Going to be an interesting ACCC review regardless of who takes it over.

In this one I'd be preferring that the below rail goes to ARTC to be honest and that the above rail converts to the standard competitive practice elsewhere.  The ARTC owns the track up to Adelaide anyway.  This route has the benefit of distance and I'm not sure a monopolist structure like the GWA/ORA is required.  The construction losses have been taken already.

The only active track that One Rail 'owns' is the 60km islolated narrow gauge line between Kevin and Thevenard, and the long term lease it has over the Tarcoola to Darwin railway. Adelaide to Tarcoola is part of the existing ARTC network.
bingley hall

Bingley who owns the Alice to Darwin line if onerail have a lease only?
  james.au Minister for Railways

Location: Sydney, NSW
Also in the coverage is that Aurizon is looking at OneRail as a target.  As are Qube and PN.

Going to be an interesting ACCC review regardless of who takes it over.

In this one I'd be preferring that the below rail goes to ARTC to be honest and that the above rail converts to the standard competitive practice elsewhere.  The ARTC owns the track up to Adelaide anyway.  This route has the benefit of distance and I'm not sure a monopolist structure like the GWA/ORA is required.  The construction losses have been taken already.

The only active track that One Rail 'owns' is the 60km islolated narrow gauge line between Kevin and Thevenard, and the long term lease it has over the Tarcoola to Darwin railway. Adelaide to Tarcoola is part of the existing ARTC network.

Bingley who owns the Alice to Darwin line if onerail have a lease only?
bevans
Its convoluted, but ultimately and effectively AustralAsia Railway Corporation which is owned by the NT (and SA?) govts.  The lease transfers back to government sometime around 2050ish.
  james.au Minister for Railways

Location: Sydney, NSW
Also in the coverage is that Aurizon is looking at OneRail as a target.  As are Qube and PN.

Going to be an interesting ACCC review regardless of who takes it over.

In this one I'd be preferring that the below rail goes to ARTC to be honest and that the above rail converts to the standard competitive practice elsewhere.  The ARTC owns the track up to Adelaide anyway.  This route has the benefit of distance and I'm not sure a monopolist structure like the GWA/ORA is required.  The construction losses have been taken already.

The only active track that One Rail 'owns' is the 60km islolated narrow gauge line between Kevin and Thevenard, and the long term lease it has over the Tarcoola to Darwin railway. Adelaide to Tarcoola is part of the existing ARTC network.
bingley hall
Also the grain branch lines out to the Murrylands (and possibly some others).  Technically they own the track and ballast etc, but the underlying land is SA govt.  They made a mess of that privatisation that is for sure as it will be very hard/costly to sort out the legal structures (ie buy ORA out) to say reopen to Pinarooo, if they wanted to.
  bingley hall Minister for Railways

Location: Last train to Skaville

The only active track that One Rail 'owns' is the 60km islolated narrow gauge line between Kevin and Thevenard, and the long term lease it has over the Tarcoola to Darwin railway. Adelaide to Tarcoola is part of the existing ARTC network.
Also the grain branch lines out to the Murrylands (and possibly some others).  Technically they own the track and ballast etc, but the underlying land is SA govt.  They made a mess of that privatisation that is for sure as it will be very hard/costly to sort out the legal structures (ie buy ORA out) to say reopen to Pinarooo, if they wanted to.
james.au

That's why I deliberately used the word 'active'.
  james.au Minister for Railways

Location: Sydney, NSW

The only active track that One Rail 'owns' is the 60km islolated narrow gauge line between Kevin and Thevenard, and the long term lease it has over the Tarcoola to Darwin railway. Adelaide to Tarcoola is part of the existing ARTC network.Also the grain branch lines out to the Murrylands (and possibly some others).  Technically they own the track and ballast etc, but the underlying land is SA govt.  They made a mess of that privatisation that is for sure as it will be very hard/costly to sort out the legal structures (ie buy ORA out) to say reopen to Pinarooo, if they wanted to.

That's why I deliberately used the word 'active'.
bingley hall
Ugh, its always the small details i miss....

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