Panel Finds No Grounds for Proceedings in Atlas Arteria Disclosure Dispute

• Panel rejects application on disclosure grounds
• Focus on right of first offer and put option terms
• Atlas Arteria’s target’s statement due imminently
• Potential future disputes remain if disclosures fall short
• No immediate risk of frustrating action found

Panel Declines to Intervene in Atlas Arteria Disclosure Dispute

The Australian Takeovers Panel has opted not to conduct proceedings following an application from Diamond Infraco 1 Pty Ltd, an IFM Global Infrastructure Fund subsidiary, challenging the adequacy of Atlas Arteria’s disclosure amid its off-market takeover bid. Central to the dispute was Atlas Arteria’s issuance of a right of first offer (ROFO) notice to Ontario Teachers’ Pension Plan Board regarding its 66.67% stake in the Chicago Skyway toll road.

The ROFO notice, signalling a potential sale opportunity to Ontario Teachers, was disclosed nine days after the takeover bid announcement, prompting questions about whether Atlas Arteria breached continuous disclosure obligations. However, the Panel found no compelling reason to intervene at this stage, noting that Atlas Arteria’s forthcoming target’s statement, due by 26 May 2026, is expected to address these issues comprehensively. The Panel also left open the possibility of fresh applications should the target’s statement prove insufficient.

Governance Rights in Chicago Skyway Under Scrutiny

The dispute hinged on two key governance mechanisms in the Chicago Skyway Shareholders Agreement: the ROFO and a put option held by Ontario Teachers. The ROFO requires any shareholder wishing to sell its stake to first offer it to the other party at a specified price, with a 180-day window to pursue third-party sales if declined. The put option allows Ontario Teachers, upon a change of control at Atlas Arteria, to either retain its stake or sell it back to Atlas Arteria at fair market value plus 7.5%.

These terms were initially disclosed in a September 2022 ASX presentation when Atlas Arteria acquired its majority interest. The applicant argued that the recent ROFO notice issuance warranted more immediate and detailed disclosure given the ongoing takeover bid. However, the Panel was unconvinced that additional information beyond prior announcements was necessary before the target’s statement release, especially since no final orders were sought regarding alleged continuous disclosure breaches.

Frustrating Action Claim Considered Premature

Diamond Infraco also contended that if Ontario Teachers declined the ROFO and Atlas Arteria proceeded to sell its Chicago Skyway interest to a third party, such a sale would breach a condition of the takeover offer and constitute a frustrating action. The Panel dismissed this claim as premature, observing no immediate indication that a third-party sale was imminent.

This decision follows the Panel’s earlier clearance of Diamond Infraco’s bid mechanics, including conditional price hurdles and ASIC relief, which allowed the takeover offer to proceed despite regulatory scrutiny. Atlas Arteria’s board has consistently recommended securityholders reject the bid, citing undervaluation and strategic concerns, while maintaining steady operational performance with 9.3% EBITDA growth in 2025.

Investors should watch closely for the target’s statement release, which will clarify these governance issues and potentially reshape the takeover narrative. The Panel’s deferral leaves a window open for further regulatory challenges depending on the completeness of forthcoming disclosures.

Bottom Line?

Atlas Arteria’s upcoming target’s statement will be pivotal in settling disclosure disputes and shaping the takeover battle’s next phase.

Questions in the middle?

• Will Atlas Arteria’s target’s statement fully satisfy disclosure requirements on Chicago Skyway governance?
• Could a third-party sale of Chicago Skyway interests emerge as a real threat during the bid period?
• Might the Takeovers Panel revisit the matter if new information reveals material nondisclosure?