After weeks of speculation about it selling its Patrick ports division, Asciano has revealed that Toronto-based Brookfield Infrastructure pitched a cash-and-scrip offer. Photo: Peter Rae

Investors are cautious about a $9 billion offer for Asciano by a large Canadian asset manager succeeding without a higher bid because they believe it under values Australia's largest ports and rail company. 

After weeks of speculation about it selling its Patrick ports division, Asciano has revealed that Toronto-based Brookfield Infrastructure pitched a cash-and-scrip offer on Friday that valued the company at $9.05 a share, a 36 per cent premium to its closing price on Tuesday.

Asciano's shares surged 23 per cent immediately after emerging from a trading halt on Wednesday. However, the company cautioned that negotiations over the non-binding offer were at a "very early stage" and its shares closed at $7.77 - up 17 per cent on the day but significantly below the offer price.

Putting a further dampener on the success of the proposed deal, Brookfield said there "can be no assurance that a transaction will be completed".   

If it eventuates, a full bid for Asciano would easily surpass in size Japan Post's $6 billion takeover of transport and logistics giant Toll Holdings this year. However, it would fall short of British drinks giant SABMillier's $12.3 billion acquisition of Foster's in 2011. 

The non-binding offer for the entire company comprises a combination of cash and units in Brookfield's listed infrastructure fund, Brookfield Infrastructure Partners.

While surprised that Brookfield had made an offer for the entire company, Argo Investments' senior investments officer, Andy Forster, said many investors were interested in the type of transport and infrastructure assets owned by Asciano. 

"There is still a lot of water to go under the bridge. It is certainly far from a done deal," he said, adding that the share price was trading well below the offer price because a formal offer had yet to be made.  

Argo is the seventh-largest shareholder in Asciano with a 0.67 per cent stake.

White Funds Management managing director Angus Gluskie said the offer served as a reminder to investors that there were businesses whose share price did not reflect its full value. 

"There is more to come here. [Brookfield] obviously believe the business has a more long-term trajectory," said Mr Gluskie, whose firm is "overweight" in Asciano.

"The interesting thing here is the premium that has been suggested. It is reasonably large [but less than Japan Post's bid for Toll Holdings]."

While the Australian Competition and Consumer Commission and the Foreign Investment Review Board will assess the deal if it progresses, the offer from the Canadians is not expected to raise serious concerns given increased competition on Australia's waterfront over the last year.

Asciano's Patrick container ports business has faced greater competition from the entry of Hong Kong-based Hutchison Ports, which has new stevedoring operations in Brisbane and Sydney. 

The company's coal-haulage operations compete against Brisbane-based Aurizon, formerly known as QR National, in NSW and Queensland.

Macquarie Equities transport analyst Sam Dobson said the Canadians' interest in Asciano reflected a clamour among investors for infrastructure and transport assets.

"Clearly Brookfield would value the port assets [of Asciano] quite highly," he said. "[But] there is no real firm offer yet, so it is not surprising that it is trading at a discount to the offer price."

Apart from a slew of construction and commercial property assets in Australia, Brookfield owns the Dalrymple Bay coal terminal in Queensland and about 5000 kilometres of rail track in Western Australia. It has more than $US200 billion ($259 billion) in assets under management around the world. 

Asciano said its board had concluded that it was in the interests of its shareholders to engage in further talks with Brookfield on "an exclusive basis to progress the proposal".

The ports and rail company, which was spun out of Toll Holdings in 2007, cautioned that the negotiations were at a "very early stage and a number of significant steps", including a period of due diligence, were needed before a formal offer was made. 

"The board of Asciano notes that there is no certainty that the proposal will result in an offer for the company," it said.

"The board also notes that this disclosure may result in Brookfield withdrawing its proposal."

The company is best known for its Patrick stevedoring business, which operates at ports in Sydney, Melbourne, Brisbane and Fremantle.

In 1998, Patrick was at the centre of one of the most divisive industrial battles in Australia's history as the stevedore - then under the leadership of Chris Corrigan - sought to bust the Maritime Union of Australia's dominance of the workforce.

Asciano chief executive John Mullen said as recently as last month that the company had been looking for merger partners for its container terminals business.

The company considered putting the ports business on the sales block in 2011 but ditched the idea because it believed it would fail to gain an offer "attractive enough".

Last month Patrick completed the automation of the container operations at Sydney's Port Botany, which has resulted in the redundancy of several hundred workers over the last few years.

Asciano, which reports its full-year results on August 17, has more than $3 billion of debt.