Transurban today announces that it has agreed with Canada Pension Plan Investment Board (“CPPIB”) to acquire CPPIB’s 25% interest in NorthWestern Roads Group (“NWRG”) and CPPIB’s 10.5% interest in Sydney Transport Partners (“STP”) (together, “Acquisition”).
Acquisition highlights
Transurban will acquire CPPIB’s Australian toll road assets, comprising interests in NWRG and STP for total cash consideration of $4.5 billion 1.
- On completion of the Acquisition, Transurban’s ownership interests will increase to:
- 75.0% (from 50%) of NWRG, which owns Westlink M7 and NorthConnex
- 60.5% (from 50%) of STP, which owns WestConnex
- The Acquisition is not expected to impact FY27 Free Cash and distributions. The Acquisition is expected to be value accretive and provide growing accretion to Transurban’s Free Cash per security over the medium 2 and long-term, supported by the addition of the M5 West to the WestConnex concession and the opening of the Western Harbour Tunnel
- The Acquisition will initially be funded with committed debt facilities that are expected to be refinanced into longer-term debt over time. No equity funding is required
- Completion is subject to a number of conditions as detailed in the section below
- The acquisition of additional interests in Westlink M7 (concession ending 2051) and NorthConnex (concession ending 2048) and WestConnex (concession ending 2060) supports Transurban’s weighted average concession life
- The Acquisition multiples are attractive based on historical transactions, given the concession length and relative maturity of the three assets
- There will be no change to tolls or the on-road experience for NSW motorists
- This Acquisition is a change in the economic interests between partners, with no substantive impact on NWRG and STP governance rights
Transurban CEO Michelle Jablko said, “Sydney is a core market for Transurban. WestConnex, Westlink M7 and NorthConnex provide options for Sydney motorists as they move around the city and will play an important role in supporting Sydney’s growth for decades to come.”
“We remain disciplined with how we allocate capital in our key markets of Australia and North America and we are committed to maintaining strong investment grade credit metrics.”
“CPPIB has been a long-term investment partner with Transurban, and we appreciate the deep and collaborative relationship.”
Conditions and timing
The acquisitions of NWRG and STP are inter-conditional and each remains subject to Australian Competition and Consumer Commission clearance, the terms of the relevant project documents and other relevant contractual approvals. Transurban is respectful of these processes, and subject to these approvals, the Acquisition is anticipated to complete during calendar 2027 3.
Acquisition funding
Transurban has put in place committed debt facilities to fund the Acquisition, which will rank equally with Transurban’s corporate senior secured debt.
Following completion, Transurban expects to refinance these facilities into longer-term debt over time. No equity funding is required.
Transurban remains committed to its existing Baa1/BBB+ credit ratings which it expects will remain unchanged following completion of the Acquisition.
1. Inclusive of any stamp duty.
2. The Acquisition is expected to have an immaterial level of Free Cash per security dilution in the short-term.
3. The Valuation Date has been agreed as 31 March 2027 with a roll forward price adjustment payable from the Valuation Date.
