Atlas Arteria (ASX:ALX) completes acquisition of Chicago Skyway

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 Atlas Arteria (ASX:ALX) completes acquisition of Chicago Skyway
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Highlights:

  • Atlas Arteria completes acquisition of 66.6% interest in Chicago Skyway toll bridge.
  • The purchase price of the stake is an enterprise value of US$4,403 million.
  • The shares of Atlas Arteria have been buzzing in the red territory since Friday morning.

 

Private toll roads operator Atlas Arteria (ASX:ALX) on Friday (2 December 2022) shared via an ASX filing that it has completed the acquisition of majority interest in the Chicago Skyway Toll Bridge. Chicago Skyway is a 12.5km elevated toll roll with an operating history of more than 60 years. As reported, the concession lease of the road is 99 years, with 81 years remaining.

Post the acquisition, Atlas Arteria has a 66.67% stake in Chicago Skyway, and Ontario Teachers’ Pension Plan have the rest, 33.33% interest.

Details of the transaction

According to an ASX announcement, Atlas Arteria has acquired Chicago Skyway for an enterprise value of US$4,403 million. The company has funded the transaction with the proceeds of the non-renounceable entitlement offer which raised circa AU$3,098 million. As reported, the company had fully hedged the price at the time of the entitlement offer and acquisition announcement at a forex rate of 0.6847.

Atlas Arteria said that the Chicago Skyway is a value accretive acquisition as it offers an internal rate of return that exceeds the group’s existing risk-adjusted cost of equity. The concession life of the toll road doubles the weighted average concession life of the company from 18 years to 31 years, according to an ASX announcement.

Management Commentary

On the development, Graeme Bevans, CEO Atlas Arteria, commented

He added that the team has a business plan for the acquired asset and is focused on implementing it in the coming months. However, Bevans has not disclosed the business plan.

Distribution guidance for FY23

The company is expected to distribute 40 cents per share in 2023, which represents a 6.3% yield at the offer price. Atlas Arteria said that the distribution is assisted by the capital release period from the toll road. The company expects to receive around US$230 million over the coming two years.

Share performance of Atlas Arteria

At 11:26 AM AEDT, Atlas Arteria shares were spotted trading 1% down at AU$6.93 per share with a market capitalisation of AU$10.15 billion. Including this, the share has increased by 15.12% in the past one year. On a year-to-date basis, it has surged by 7.11%, and in one month, it has increased by 4.68%.

Meanwhile, the benchmark index, ASX 200 Industrial (INDEXASX:XNJ) was down by 0.73% at 6,568.70 points.

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