Transurban Shares Drop as Canadian Pension Plan Exits

It’s been a bumpy road for the Canadian Pension Plan Investment Board and toll road operator Transurban, and now the two groups are finally parting ways.

Canadian Pension Plan Investment Board is selling its stake in Transurban for $903 million, just over a year after Transurban rejected a $7.2 billion takeover bid from the group, along with other major shareholders CP2 and Ontario Teachers Pension Plan.

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It was then that the Ontario Teachers Pension Plan got out, selling a 14 per cent stake and leaving the Canadian Pension Plan Investment Board to fend for itself against Transurban’s $630.5 million purchase of the Lane Cove Tunnel. The purchase was combined with a $542 million accelerated entitlement offering, which was much more than was needed to pay for the purchase.  Despite the Canadian Pension Plan Investment Board, CP2 and Ontario Teachers Pension Plan warning that may not proceed if Transurban went ahead with an equity raising, the toll group did anyway.

Now the Canada Pension Plan has sold almost 170 million shares for $5.23 a piece. The block trade was picked up by a range of mostly domestic institutional investors.  “The entitlement offer was on a 1-for-11 basis at $4.60 a share, a discount of 6.5 per cent to the group's previous security price of $4.92,” The Australian reported.

Commenting on the transaction, Transurban CEO, Chris Lynch said, "Transurban looks forward to working with those existing security holders that have taken the opportunity to increase their stakes and also understanding the views and aims of new security holders to the <span data-scayt_word="register." "="" data-scaytid="1">register.”

Transurban shares fell $0.18 to $5.18 yesterday after the Canada Pension Plan's decision to exit was announced.