Atlas Arteria acquires Chicago Skyway stake, KKR-led takeover of Ramsay collapses and Lynas faces water shortage

Toll road operator Atlas Arteria (ASX: ALX) will acquire a 66.7% stake in the Chicago Skyway in Illinois for US$2 billion (A$2.9 billion).

Atlas Arteria confirmed the acquisition along with details of an equity raise to come “in due course,” which will go towards funding the deal.

Experts believe the Chicago Skyway has 81 years of remaining concession life, offering congestion relief in a significant transportation corridor.

The acquisition is subject to regulatory approvals, which includes consent from the City of Chicago.

News of the deal wasn’t music to all parties’ ears, as Atlas Arteria’s biggest shareholder, IFM Investors, previously urged the company not to go through with the acquisition.

IFM had threatened to call a general meeting and try to spill the board if Atlas Arteria progressed its plans for the purchase.

The investment company acquired a 19% stake in Atlas Arteria recently, but is now stuck with the dilemma of either participating in the equity raising or watching its shareholding in the Atlas Arteria dilute.

IFM signalled its disappointment with the decision and a spokesperson has said it is “considering options.”

Ramsay Health Care

Ramsay Health Care’s (ASX: RHC) share price has plunged more than 10% this week, after it was revealed the KKR-led consortium was “not in a position to improve the terms of the alternate proposal”.

The consortium initially made an $88 per share bid for Ramsay in April, which was canned.

Ramsay said on Tuesday the consortium had sent correspondence that refers to Ramsay’s FY2022 result. However, the consortium noted that if Ramsay was “willing to reset valuation expectations” and consider a new proposal, it would “move quickly” to discuss “mutually acceptable terms”.

While both parties now remain in limbo over the deal, no offers are said to have been considered at this stage, with Ramsay adding “there is no certainty that any further proposal will be forthcoming or that any proposal would result in a transaction.”

The initial $20 billion deal would have marked one of the largest private equity buy-outs of an Australian company.

Moving forward, Ramsay said it “remains focused on its business, driving its strategy to be a leading integrated healthcare provider of the future and the creation of long-term value for shareholders.”

AGL Energy

AGL Energy (ASX: AGL) has suffered further setbacks at its Loy Yang A Power Station in Victoria, with its broken Unit 2 experiencing more delays, after it was expected to resume service this month.

An electrical fault caused the Unit 2 to be first taken out of service in April, which contributed to the nation’s energy crisis and market suspension in June.

A re-start date was originally set for the start of August, but was delayed to September, and has now been pushed back until end of October, after testing discovered a defect in a part that requires further manufacturing to take place in Switzerland.

AGL has confirmed the Loy Yang 2 outage won’t significantly impact on its financial forecast, but will inform the market of its updated strategic review at the end of the month, along with its earnings guidance for FY2023.

The company will be buffered from the impact by its other units, which returned to service and have enjoyed a boost due to the rising wholesale prices.

A2 Milk

Infant formula company A2 Milk (ASX: A2M) shares have jumped this week on the news that. Synlait Milk, which makes Chinese-label infant formula for A2 confirmed it had received the necessary regulatory approval to keep making the product, while it continues to work through China’s new regulation process.

The product registration for the $4.1 billion dairy giant’s China-label infant label was set to expire in September but has now been renewed until 21 February next year.

A2 Milk chief executive officer David Bortolussi said the news of an extension was pleasing for all involved.

“We remained focused on the China market and are looking forward to the opportunity to make our newly formulated infant milk product available to parents and infants in China,” he said.

This news compliments A2 Milk in previously outlining its plans to reviving its Chinese Daigou community.

Lynas Rare Earths

Lynas Rare Earths (ASX: LYC) reported a water shortage at its Lynas plant in Malaysia following unstable supply in July and August and an equipment failure in early September from its local supplier PAIP.

The company said despite the unpredictable months of July and August, normal water supply was expected to resume this month.

“Normal water supply was expected to resume during September 2022, which would have enabled the shortfall from July and August to be mitigated,” it said.

However, PAIP stated the situation would continue for at least the next week.

Lynas now expects the water supply issues to remain for the rest of September, but ultimately not have a significant impact on the full year result.

“The PAIP water supply issue will significantly affect production during this quarter,” it said.

“However, with the implementation of additional strategies, the effect on the full year result is not expected to be material.”