Pensioners to own Macquarie Comms

Canadian pensioners are set to become the owners of Macquarie Communications Infrastructure Group (MCG) after the target's independent directors recommended a $1.37 billion takeover bid by Canada Pension Plan Investment Board (CPPIB).

The offer from one of Canada's largest institutional investors, which has extensive interests in infrastructure, follow weeks of soul-searching at MCG about how to enhance value for securityholders.

Many of the major specialist funds orbiting investment bank Macquarie Group Ltd have been looking at ways to close the gap between the price of their securities and the net value of their assets.

"Our support for the offer reflects its attractive premium to the recent trading price of Macquarie Communications, that the offer is fully cash-funded and that it provides investors with certainty and an opportunity to crystalise value," the chairman of MCG's independent board committee Malcolm Long said.

CPPIB on Tuesday offered $2.50 cash for every MCG stapled security.

The price values MCG at $1.37 billion and implies an enterprise value, which includes debt, of $7.3 billion.

The offer, to be implemented via a scheme of arrangement, represents a 67 per cent premium to the last closing price of MCG's stapled securities.

MCG stapled securities soared in the wake of the offer, and finished 79.5 cents, or 53.18 per cent, higher at $2.29 on Tuesday.

MCG's three businesses comprise Australia's largest independent broadcast transmission services provider Broadcast Australia, UK TV and radio broadcast transmission services business Arqiva and Great Britain emergency services communications provider Airwave.

Shares in Macquarie Group, which derives fees from various listed specialist funds such as MCG, jumped $2.05, or 8.2 per cent, to $27.05.

MCG had been reviewing certain investments and potential third-party interest in its's business.

Mr Long said the independent directors had unanimously recommended securityholders vote in favour of the offer, in the absence of a higher bid.

Acceptance of the offer is subject to an independent expert concluding that the scheme is in the best interests of securityholders.

The offer is also subject to regulatory approval and approval by the Australian Foreign Investment Review Board.

CPPIB submitted its proposal during MCG's exploration of its options.

Mr Long told analysts that tight capital markets had influenced the directors' decision to recommend the offer of $2.50 per security.

He said it would not be an easy task to secure funding for the future growth of MCG's assets and to refinance asset-level debts.

Mr Long said MCG had already undertaken several capital management initiatives to try to boost value for securityholders, including asset sales, the purchase and cancellation of exchangeable bonds, and a reduction in distributions.

"They had almost no impact in the marketplace," he said.

"And for the directors, it's simply not possible for us to say `she'll be right - the market will come good in a year, two years, whenever'."

CPPIB invests the pension contributions of 17 million Canadians and has $C108.9 billion ($A125.9 billion) of assets under management.

CPPIB will fund the offer from existing cash resources.

"This transaction enables us to acquire a diversified portfolio of outstanding communications infrastructure assets with leadership positions in their respective markets, stable cashflows and long-term growth potential," CPPIB said.

MCG booked a net loss of $1.1 billion in the first half of 2008/09, primarily reflecting the non-cash, accounting impact of mark-to-market losses on interest rate swaps.

MCG said in its first half report that although its underlying business had performed strongly, there had been market concerns over MCG's financial obligations at the fund level.