It would need EastLink’s investors to approve any acquisition, but is keen to give it a crack.
So fund managers and analysts are brushing up on EastLink’s recent traffic flows and earnings, to see whether they too think it makes sense for Transurban. The road would come with about a 20-year concession.Macquarie’s equities research analysts - separate to its bankers - have weighed into the debate. They reckon it’s a resounding yes, and that Transurban shouldn’t have too much trouble convincing EastLink’s other investors of the benefits to being part of the Transurban family.
“Surprisingly, Eastlink’s cash cost to serve is ~$0.85-90/trip vs TCL at $0.95-1.00/trip, thus it appears efficient ... We would expect efficiency to come through reduced corporate costs and Transaction and Customer Service expenses in the order of $10-20m pa, ie $0.04-0.09 per trip. Strategically, they reckon it would also be good for Transurban’s portfolio - the company already has full ownership of the 22km CityLink tollroad and the West Gate Tunnel Project - and say the ASX-listed giant could also teach EastLink’s owners a thing or two about balance sheet management and capital releases.
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