Hostile $5 bln creeping buyout warrants patience

Atlas Arteria

14/05/2026 02:21

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.

By Antony Currie

MELBOURNE, May 14 (Reuters Breakingviews) - It must be tempting to accept a premium, however small, from a hostile bidder after four years of near-constant stock market declines. That's the choice shareholders of toll-road operator Atlas Arteria ALX.AX face after IFM Investors officially launched a hostile bid this week, first unveiled in April, valuing the Sydney-listed target at some $5 billion. An earlier deal deploying a similarly aggressive M&A strategy suggests they can hold out for more.

The Australian investment firm, which already owns 35% of the target, has put a premium of as low as 10% on the table, rising to 18% if tenders take its stake above 45%. It's totally different to the paint-by-numbers pattern that characterises the vast majority of agreed and unsolicited deals Down Under. IFM had already been utilising an arcane takeover rule borrowed from the British system, which ditched it in 1988: after getting to a 20% stake, a stalking horse can buy another 3% every six months, allowing it to take control of a target without paying a premium.

That may well have been IFM's plan until Hugh Wehby, who joined Atlas as CEO in 2024, in March said he might look for acquisitions. Problem is, the toll-road operator has a poor M&A track record thanks to his predecessor, who bought a majority stake in the Chicago Skyway in 2022 despite IFM's objections; Atlas last week admitted it may sell the asset for roughly what it paid.

So IFM's ire - and urgency to take control - is understandable; it even abstained from voting at its target's annual meeting on Wednesday. But while Atlas' other shareholders can't stop the firm from securing a controlling stake eventually, they can look to a similar hostile deal for comfort.

Five years ago, local conglomerate Seven Group, run by Ryan Stokes, went straight to building materials firm Boral's shareholders with a nil-premium offer after creeping up to 23%. Within weeks, Stokes upped the bid twice, to a 13% premium that bagged him two-thirds of the company. He then crept up the register before returning in 2024 to mop up most of the rest of the stock at what was, including earlier special dividends from asset  sales, effectively a near-40% premium.

That suggests with a bit of patience, Atlas investors can probably get the investment giant to cough up a better price.

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CONTEXT NEWS

      IFM Investors, a money manager with A$268 billion ($194 billion) in assets and owned by a number of Australian superannuation funds, on May 13 abstained in all voting at Atlas Arteria's annual general meeting. The investment firm owns almost 35% of the toll-road company and on April 27 launched a hostile offer to buy the remaining shares directly from the remaining securities holders.

As a result of IFM's abstention, all motions on the agenda at the AGM, including the re-election of Chair Debra Goodin, passed with at least 96% support.

Atlas stock has been in reverse for years https://www.reuters.com/graphics/BRV-BRV/byvrnanwzve/chart.png

(Editing by Robyn Mak; Production by Aditya Srivastav)

((For previous columns by the author, Reuters customers can click on CURRIE/antony.currie@thomsonreuters.com))