A consortium of power utilities and infrastructure companies, led by Hong Kong-based investment and energy business CK Infrastructure built by billionaire Li Ka-shing, has lobbed a $13 billion takeover of Australia’s largest gas network operator APA.
In its statement to the market, APA said it had received an unsolicited takeover proposal from CK Infrastructure of $11 a share.
This is a 33 per cent premium to Tuesday’s closing price.
APA welcomed the offer.
“Based on the indicative price of $11 cash per stapled security, the APA board considers that it is in the best interests of APA’s Securityholders to engage further with the consortium,” APA said in the statement. “Accordingly, APA has entered into a confidentiality agreement with CKI to allow it the opportunity to undertake due diligence on a non-exclusive basis.”
Other businesses associated with the offer are SK Asset Holding and Power Asset Holdings. Both are ultimately controlled by Li Ka-shing.
The bid for APA means that CKI is expanding its footprint in Australia. It already has a controlling stake in South Australia’s ESTA business and in Victoria’s two largest electricity companies Citipower and Powercor. In 2017, CKI acquired the Duet Group’s power lines, gas pipelines and power stations for $7.3 billion.
Because the deal is likely to attract the attention of the Foreign Investment Review Board and the Australian Competition and Consumer Commission, the consortium has informed APA that it has already had discussions with the ACCC and FIRB.
It said it had told the ACCC it plans to divest the West Australian assets of APA’s pipeline business. “The consortium has proposed a divestment package which would include APA’s interests in the Goldfields Gas Pipeline, Parmelia Gas Pipeline, Mondarra Gas Storage Facility and a standalone management team,” APA said.