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Abertis-led group drops $12.8bn Pennsylvania Turnpike bid

The landmark bid, whose deadline for acceptance was twice pushed back in hopes of getting Pennsylvania legislators to approve it, lapsed on Tuesday after Abertis decided not to extend it any further.

Abertis Infraestructuras of Barcelona has opted to let its consortium’s $12.8 billion (€8.2 billion) bid for the Pennsylvania Turnpike expire today, a spokesperson for Pennsylvania Governor Edward Rendell confirmed late Tuesday. 

“Progress in the approval process, which is taking longer than expected, alongside uncertainties in financial markets are behind the decision, which will give the partners of the consortium more freedom to assess other opportunities and projects, some of which are in part related to the current situation,” Abertis said in a statement. 

Had it been approved, the deal would have been the largest highway privatisation in US history.

In May, Pennsylvania Transportation Partners, the consortium formed by publicly listed Abertis and Citi Infrastructure Investors, was awarded the right to operate the 531-mile turnpike for 75 years. The all-cash $12.8 billion offer beat out competing bids of $12.1 billion and $8.1 billion by Goldman Sachs- and Macquarie Group-led consortiums, respectively.

The final acceptance of the bid was subject to approval by the Pennsylvania state legislature, where it faced

Battle for the Turnpike

stiff opposition from key legislators, including the chairman of the state house of representatives’ transportation committee, Joseph Markosek. Legislators said they were concerned about a lack of oversight on the road, and high increases in tolls under private ownership, among other things.

The legislature did not act to approve the offer before leaving for summer recess on 20 July. The group’s offer, scheduled to expire on that day, was extended to today.

Legislative leaders made it clear that the lease proposal, despite Governor Rendell’s support, was unlikely to be voted on in the current legislative session, which is already shortened due to the election season.

Pennsylvania is facing a shortfall of about $450 million for its transportation budget. The federal government recently rejected the state’s efforts to increase tolls on Interstate 80, which runs across Pennsylvania. With the Turnpike proposal no longer on the table, Governor Rendell is not ready to give up his hopes of leasing the road.

“The governor is going to continue to pursue legislation to allow the leasing of the turnpike. When that legislation is enacted, it would be the governor’s hope to execute a lease with the Abertis/Citi team,” said Charles Ardo, a spokesperson for Governor Rendell.

As of press time it was unclear whether the Abertis-led consortium will release credit lines it arranged to pay for the bid.

Abertis, an infrastructure investor and developer, was not immediately available for comment. Citi Infrastructure Investors did not returns calls Tuesday evening. The firm was founded in 2007 and is part of Citi Alternative Investments, which has $54 billion under management.