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Hong Kong's CKI Group bids USD 9.8 billion for Australia's top gas transporter

Gasoil News - Published on Fri, 15 Jun 2018

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Reuters reported that Hong Kong's CK Infrastructure Holdings has made a AUD 12.98 billion takeover offer for Australia's biggest gas pipeline company, APA Group, offering a hefty 33 percent premium to tap into a hot gas market. The deal would make the private Chinese firm the major player in Australia's east coast gas pipeline network, but comes as soaring gas and power prices have caused political blowback, raising concerns it could run into competition and national security hurdles.

CK Infrastructure, leading a consortium with CK Asset Holdings and Power Assets Holdings, offered AUD 11 cash per stapled security, well above APA's last close of AUD 8.27 and its record high of AUD 9.90 hit a year ago.

Mr Jason Teh, Chief Investment Officer at Vertium Asset Management, which does not own shares in APA, said that "It's a decent premium. What it basically shows is there is a disconnect between how the private market wants to value these assets and how the stock market values them."

Part of the CK Hutchison Holdings ports to telecoms conglomerate, CK Infrastructure already owns a swathe of gas and power assets across Australia, and last year bought energy networks operator DUET Group for AUD 7.4 billion.

APA said that it would evaluate the bid and agreed to open its books for the consortium to review, while leaving the door open to other potential suitors. It told shareholders to take no action.

APA said in a statement that "Based on the indicative price of AUD 11.00 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."

The CKI-led consortium welcomed APA's decision to enter talks, saying the all-cash proposal provided a "compelling opportunity" for security holders to realise value.

APA's biggest shareholder, UniSuper, which owns a 16.1 percent stake, did not comment on the offer price, but chief investment officer, John Pearce, said it fully supported allowing CKI to conduct due diligence.

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Posted By : Nanda Koijam on Fri, 15 Jun 2018
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