IFM Investors, through its subsidiary Diamond Infraco 1 Pty Ltd, has significantly increased its stake in Atlas Arteria, a toll road operator, to over 40%. The recent increase brought their holdings from 34.5% to 38.3% via on-market purchases, and then to 39.6% including shares held for clients, ultimately surpassing 40%. This comes as IFM reaffirmed its offer price of $5.10 per security, valuing Atlas Arteria at approximately $7.4 billion. This updated offer comes after an initial bid in April, which valued the company at $7 billion. Diamond Infraco has declared the $5.10 offer as "BEST AND FINAL AND WILL NOT BE INCREASED" unless a competing proposal emerges.
Atlas Arteria's board continues to advise shareholders to reject IFM's offer, asserting that the company is materially undervalued. They highlight that the $5.10 per security offer is 12% below the midpoint of the independent expert's valuation range of $5.39 to $6.20. Atlas Arteria also pointed out IFM's history of raising offer prices in previous public market situations. The company has told shareholders that IFM "can pay more" and encouraged them not to accept the current offer.
IFM's takeover bid was initiated in late April, citing Atlas Arteria's underperformance and a change in strategy towards more mergers and acquisitions. Atlas Arteria, however, is actively exploring the sale of its 66.67% stake in the Chicago Skyway, aiming to sign agreements in the fourth quarter of 2026. The company anticipates that the proceeds from this sale would be in addition to its distribution guidance of 40 cents per share for the year and expects tax costs from the sale to be immaterial. IFM has previously contested that such a sale might result in a tax-inefficient outcome for Atlas Arteria and its securityholders.
The unconditional offer is scheduled to close at 7:00 pm Sydney time on June 25, 2026, and will not be extended unless IFM's voting power exceeds 50%, which would trigger an automatic 14-day extension under Australian Corporations Act. Diamond Infraco has urged Atlas Arteria securityholders to accept the offer for a cash-certain value or sell their securities on-market at $5.10, warning of potential material fall in value post-offer close. They also cited risks for non-accepting shareholders, including reduced liquidity, potential index-weighting impacts, exposure to contingent liabilities like the OTPP Put Option, and increased financial risk from a proposed $1.2 billion bridge facility, as well as operational underperformance and potential value-destructive asset sales or M&A.
