Transurban Group Ltd. · ASX:TCL
Transurban — Merger or Acquisition (December 2006)
31 slides from Transurban's merger presentation, Dec 14, 2006
Slide 1: Merger of Transurban Group & Sydney Roads Group
MERGER OF TRANSURBAN GROUP & SYDNEY ROADS GROUP 14 December 2006 14 December 2006 -1-
Slide 2: Disclaimer – Transurban
Disclaimer – Transurban The Transurban Group is a triple stapled security listed on the Australian Stock Exchange comprising Transurban Holdings Limited (ACN 098 143 429), Transurban Holdings Trust (ARSN 098 807 419) and Transurban Limited (ACN 098 143 410). The responsible entity of the Transurban
Slide 3: Disclaimer – Sydney Roads Group
Disclaimer – Sydney Roads Group Sydney Roads Group is a double-stapled security listed on the Australian Stock Exchange comprising Sydney Roads Limited (ACN 119 323 901) and Sydney Roads Trust (ARSN 119 766 540). The responsible entity of Sydney Roads Trust is Sydney Roads Management Limited (ACN 07
Slide 4: “Natural owner” of SRG assets
“Natural owner” of SRG assets Only Transurban can unlock the value of an integrated network through: • Full ETC to deliver higher traffic • Improved customer service • Lower costs • Asset optimisation • Network enhancements 14 December 2006 -4-
Slide 5: The Offer
The Offer • Merger to proceed via off market takeover • Two offer (“Offer”) alternatives − All Scrip Alternative valued at $1.35* equivalent per Sydney Roads Group (“SRG”) security − 1 TCL security for every 5.7 SRG securities − Cash Pool Alternative valued at $1.32 per SRG security (funded by Inter
Slide 6: The Offer: consideration – two alternatives
The Offer Consideration – two alternatives ALL SCRIP CASH POOL If cash pool 1 Transurban limit is reached, $1.32 Cash 1 Transurban security for up to total cash security for every 5.7 SRG available of $500m every $7.69 securities otherwise payable in cash 14 December 2006 -6-
Slide 7: SRG comment
SRG comment • Since its inception, SRG’s focus has been on creating value for SRG security holders • The Offer from Transurban delivers that value to SRG security holders and is a good offer • SRG directors recommend that SRG security holders accept the Offer in the absence of a superior proposal, a
Slide 8: Agenda
Agenda 1. Why the merger makes sense 2. Why SRG security holders should accept the Offer 3. Why it’s a good deal for Transurban security holders 4. What the merged group would look like 5. Proposed timetable 6. Summary 14 December 2006 -8-
Slide 9: Why the merger makes sense
Why the merger makes sense Merged group unlocks value in Sydney toll road assets • Value creating network solutions only a merged group can deliver • Traffic uplift from network high speed tolling implementation • Savings and synergies of at least $8 million a year • Lower cost of capital due to inc
Slide 10: Why SRG security holders should accept the Offer
Why SRG security holders should accept the Offer Key reasons to accept: • Full offer with compelling upfront premium • Immediate increase in distributions – sustainable and growing • Opportunity to share in the merger benefits and in Transurban’s future growth • Immediate cost effective access to hi
Slide 11: Offer represents full value
Offer represents full value Compelling upfront premium to historical SRG trading price $1.40 (1) All Scrip Alternative : $1.35 $1.30 17.3% 14.2% 16.3% SRG security price 24.9% $1.20 $1.10 $1.16 $1.18 $1.15 $1.00 $1.08 $0.90 SRG VWAP SRG closing price on SRG IPO SRG average broker since quotation 12
Slide 12: Increased distributions
Increased distributions SRG security holder cash distribution uplift 12.0c Distribution to SRG security holders (per security) 2H FY07 FY08 10.0c Uplift 22.1% 8.0c 6.0c Uplift: 22.6% 10.0c 4.0c 8.2c 4.8c 2.0c 3.9c 0.0c (1) SRG Merged Group SRG Merged Group 14 December 2006 - 12 -
Slide 13: Why it’s a good deal for Transurban security holders
Why it’s a good deal for Transurban security holders • Transaction is value accretive on a risk adjusted NPV basis • Higher operational cash-flow per security and improved ICRs • Share of merger benefits • Better portfolio balance with an enhanced mix of asset maturity and geographic spread • Networ
Slide 14: Delivering additional value – the Transurban track record
Delivering additional value – the Transurban track record The past 12 months: CityLink 9 Negotiated Westgate - CityLink - Monash upgrade project 9 Tulla / Calder interchange project partially opened (ahead of schedule) 9 Delivered Rear Camera Project 9 Delivered Time to Pay 9 Delivered taxi toll inc
Slide 15: Active management generates strong returns
Active management generates strong returns Transurban vs. S&P/ASX200 1,200 Accumulated security price as a % of base period 1,000 Transurban Change: 852.7% CAGR: 23.3% 800 600 S&P / ASX 200 400 Change: 282.9% CAGR: 13.3% 200 0 1996 1998 2000 2002 2004 2006 • Total return (capital and distributions)
Slide 16: Merged group profile – $8.2 billion combined market capitalisation
Merged group profile – $8.2* billion combined market capitalisation Asset** Concession Life** Pocahontas Parkway 0-10 Years 4% 10-20 Years 1% 6% M7 40+ 11% Years 12% SRG CityLink 15% 46% 20-30 Years 30-40 Years 46% 36% Hills Motorway 25% Geography** Toll Escalation** North America 4% CPI 17% Austral
Slide 17: Proposed timetable
Proposed timetable Bidder’s Statement Scheduled Offer Opens Lodged with Offer Closing ASIC Pre-Christmas Late January Late February 2006* 2007* 2007* *Dates to be confirmed 14 December 2006 - 17 -
Slide 18: Unlocking value
Unlocking value Proposed transaction is strategically and financially compelling • Full value with an upfront premium for SRG investors • Value accretive for Transurban investors • The Offer is recommended by the SRG Board in the absence of a superior offer • Merged entity uniquely placed to unlock
Slide 19: 14 December 2006
14 December 2006 - 19 -
Slide 20: Appendices
Appendices 14 December 2006 - 20 -
Slide 21: Appendix – consideration under Cash Pool Alternative
Appendix – consideration under Cash Pool Alternative • The total amount of cash available for distribution under Cash Pool Alternative is $500 million • The relative mix of cash and securities under the Cash Pool Alternative would vary according to the number of SRG security holders who elected to p
Slide 22: Appendix – transaction funding
Appendix – transaction funding Assuming 100% Acceptance of All Scrip Alternative 100% Assuming 100% Acceptance of Cash Pool Alternative 41% 59% Bridge Facility / Hybrid Scrip • Cash Pool Alternative is capped at $500 million and initially funded through bridge facility • Hybrid issue post acquisitio
Slide 23: Appendix – financial strength
Appendix – financial strength • The merged group will have a combined market capitalisation (including CARS) of up to $8.2 billion, and be ranked in the top 35 ASX listed companies Merged SRG 100% Scrip 100% Cash TCL (2) (bid) (1) Acceptances (3) Acceptances (4) Market Capitalisation 1,260 6,912 8,1
Slide 24: Appendix – toll road profiles: CityLink
Appendix – toll road profiles CityLink (Melbourne) • 100% owned • 22 km motorway • Concession until 2034 • Toll increases greater of 4.5% or CPI until 2015, then escalated at CPI afterwards • 100% electronically tolled 14 December 2006 - 24 -
Slide 25: Appendix – toll road profiles: M2
Appendix – toll road profiles M2 (Sydney) • 100% owned • Opened in May 1997 • 21 km toll road that extends from Sydney’s western and north western suburbs • Agreement to operate the road for a maximum period of 45 years • Toll increases at greater of 1.0% or CPI per quarter • M2 linked to WM7 and La
Slide 26: Appendix – toll road profiles: Westlink M7
Appendix – toll road profiles Westlink M7 (Sydney) • 47.5% owned • 40 km motorway • Concession until 2037 • Toll increases at CPI • 100% electronically tolled • Construction completed 8 months ahead of schedule. Operational in December 2005 • Tolling operations managed by Transurban 14 December 2006
Slide 27: Appendix – toll road profiles: Pocahontas Parkway
Appendix – toll road profiles Pocahontas Parkway (Virginia, US) • 100% owned • Fully opened to traffic in September 2002. Acquired by Transurban in June 2006 • 14-kilometre/9-mile toll road in Richmond, Virginia, US • Links Interstates 95 and 295 to create a southern bypass of Richmond • 99-year con
Slide 28: Appendix – toll road profiles: Eastern Distributor / M1
Appendix – toll road profiles Eastern Distributor / M1 (Sydney) • 71.35% interest • Opened in December 1999 • 6km road linking Sydney’s CBD, Sydney Harbour Tunnel and Sydney Harbour Bridge with the city’s southern suburbs and Sydney Airport • Concession expires in July 2048 • Quarterly increase of t
Slide 29: Appendix – toll road profiles: M4
Appendix – toll road profiles M4 (Sydney) • 50.61% interest • Opened in May 1992 • 40km road, with concession for 12km of the road, that links Sydney’s western suburbs with the city’s inner west • Concession expires in February 2010 • Toll escalation at Sydney CPI 14 December 2006 - 29 -
Slide 30: Appendix – toll road profiles: M5
Appendix – toll road profiles M5 (Sydney) • 50.0% interest • Opened in August 1992 • 22km road that connects Sydney’s CBD (via the ED, the untolled M5 East and Southern Cross Drive) with Sydney’s rapidly growing south- western suburbs • Concession expires in August 2023 • Toll escalation at Sydney C
Slide 31: Notes to the presentation
Notes to the presentation Slide 11 – Offer represents full value (1) Subject to maximum aggregate cash paid out under the Cash Pool Alternative of $500m. To the extent the maximum cash limit is reached under the Cash Pool Alternative, Transurban is offering Transurban securities for the remainder of
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