Watchdog waves through Port Adelaide logistics giant buyout
The competition and consumer watchdog will not oppose Aurizon’s proposed purchase of Flinders Logistics, having previously raised concerns the deal could “substantially lessen competition” in the state’s logistics sector.
The Australian Competition and Consumer Commission (ACCC) will not oppose ASX-listed Aurizon’s proposed purchase of Flinders Logistics – a Flinders Ports subsidiary – after changes were made to the structure of the transaction.
In a statement, the ACCC said it was mostly concerned with Aurizon’s stranglehold on berths at Port Adelaide should the transaction have gone through as originally drafted.
Flinders Logistics operates stevedoring and logistics services at Berths 18-20 and 29 in Port Adelaide as well as at Port Pirie.
Berth 29 is particularly important for the import and export of certain mining products and mineral sands.
Flinders Ports is one of South Australia’s top companies and was listed at number seven on the 2023 South Australian Business Index.
The ACCC was initially concerned that the “proposed acquisition may substantially lessen competition in the supply of rail haulage services for the import and export of containerised bulk minerals in South Australia”.
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ACCC commissioner Dr Philip Williams said the watchdog was “concerned that after the acquisition, Aurizon would have the exclusive right to load and unload all trains at Berth 29”.
“Having this exclusive right was concerning to us, because it may have provided Aurizon with the ability and incentive to limit the access of competing rail haulage providers,” Williams said.
“This could have resulted in a substantial lessening of competition in the supply of rail haulage services for the import or export of containerised bulk minerals on behalf of customers in South Australia and western New South Wales and Victoria.”
The parties agreed to exclude the underlease for the Berth 29 rail pad from the proposed acquisition, allowing third parties to load and unload trains themselves.
This alteration was enough for the ACCC to change its position on the acquisition.
“Under the new transaction structure, rival rail haulage providers will no longer be required to rely on Aurizon to load and unload their trains, which will mean other logistics companies will be able to compete to supply mining customers,” Williams said.
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Further, Flinders Port Holdings – Flinders Logistics’ parent company – will retain control of the rail pad and operate it as a common user asset.
Third parties will be able to apply for a non-exclusive licence to use the rail pad for the servicing of trains under the restructure. Without this change, Aurizon would have retained an exclusive lease of that area.
“The ACCC carefully examined and consulted on the changes and has concluded that the acquisition is now unlikely to result in a substantial lessening of competition,” Williams said.
In a statement, Aurizon welcomed the ACCC’s decision.
“Aurizon will work to finalise the acquisition of Flinders Logistics, with completion expected to occur on 6 December 2024,” Aurizon said.
“Aurizon is acquiring Flinders Logistics to support our presence in South Australia with rail and port solutions for customers.”
Flinders Port Holdings CEO Stewart Lammin said the divestment of Flinders Logistics would “unlock significant strategic value for FPH, while allowing it to reinvest in critical infrastructure and expansion projects to drive increased capacity and efficiency”.
“It will also enable us to work together to leverage Aurizon’s extensive rail network and expertise in logistics, coupled with Flinders Ports’ understanding of port operations and customer needs,” Lammin said.
“The divestment of Flinders Logistics and Pirie Bulk to Aurizon aims to promote trade growth through South Australia’s key ports, building a commercial relationship, while leveraging Aurizon’s extensive rail network and logistics expertise with Flinders Ports’ deep understanding of port operations and customer needs.”
Shares in Aurizon rose by 0.29 per cent to $3.40 per share in morning trade today.
