Tollway operator Transurban Group says it will not exercise its pre-emptive right to acquire Macquarie Infrastructure Group's (MIG) 50 per cent stake in Sydney's Westlink M7 toll road.
The Westlink M7 is currently 50 per cent-owned by Transurban and 50 per cent by MIG.
Transurban said on Tuesday that the price Macquarie wanted for its Westlink stake "would not have been value-creative" for it (Transurban).
MIG announced in December that it would sell its stake in Westlink for $805 million to a new entity, Western Sydney Roads Group (WSRG).
WSRG is equally held by MIG and funds managed by QIC Private Capital Pty Ltd, a wholly owned subsidiary of Queensland Investment Corporation.
Transurban chief executive Chris Lynch said the Westlink M7 was an attractive road with a strong growth profile, and Transurban was happy to hold a 50 per cent stake in the asset, alongside MIG and its partner in the WSRG.
"However, any acquisition of additional equity in the Westlink M7 at the price created by the formation of WSRG would not have been value-creative for Transurban security holders given the funding options in this current market," Mr Lynch said.
He said Transurban would remain focused on finding opportunities that would add value for its security holders.
Meanwhile, MIG said the sale of its Westlink stake into WSRG would generate net proceeds of about $402.5 million, leaving MIG with more than $1.2 billion in cash on its balance sheet, prior to the payment of its December 2008 distribution.
MIG said on Tuesday it was in talks on selling down its interest in WSRG.
"MIG will update the market on completion of the sale to WSRG - which is anticipated by the end of the first quarter 2009 - and will continue discussions with third parties regarding a sell-down of its interest in WSRG," MIG said.
Transurban securities were 22 cents higher at $5.17. MIG was up 0.5 cents at $1.725.
