Australia's Atlas Arteria urges shareholders to reject IFM Global’s sweetened $5.2 billion bid

By Rajasik Mukherjee and Shruti Agarwal

June 15 (Reuters) - Australia's Atlas Arteria on Monday urged its shareholders to reject IFM Global Infrastructure Fund’s improved takeover offer, saying the revised A$7.40 billion ($5.23 billion) bid still undervalues the toll roads operator.

The response came after IFM raised its offer to A$5.10 per share from A$4.75 earlier in the day, calling this its “best and final” proposal unless a competing bid emerges.

The revised offer represents a 17.8% premium to Atlas’s closing price before IFM first announced its bid in April.

IFM said that the higher offer also implied a value for Atlas' Chicago Skyway in line with its 2022 acquisition price, and towards the upper end of an independent expert's valuation range. However, the offer remains below the expert's valuation of A$5.39 to A$6.20 per share.

"The revised bid narrows the valuation gap, but not enough to bridge it," said Hebe Chen, market analyst ​at Vantage Markets.

IFM had first approached Atlas in late April with a A$6.89 billion bid, offering A$4.75 per share, but the toll roads operator rebuffed the offer in May, saying the "highly conditional" offer materially undervalued it.

Atlas also responded to media reports that IFM could seek to lift its stake through an “on-market raid”, saying it reserved the right to take action, including approaching Australia's Takeovers Panel, if stock borrowing were used to facilitate short selling to the bidder or into the offer. 

The company's shares ended 0.6% higher at A$5.110, underperforming the broader benchmark index , which rose 1.3%.

"Share-price reaction suggests investors remain cautiously positive that the deal process is not over, with the stock moving closer to the new offer price fairly quickly after the revised bid," Vantage Markets' Chen said.

Atlas Arteria is a global owner, operator and developer of toll roads, with a portfolio of five assets spanning France, Germany and the United States.

($1 = 1.4130 Australian dollars)

(Reporting by Shruti Agarwal & Rajasik Mukherjee in Bengaluru; Editing by Sonia Cheema and Rashmi Aich)