Hong Kong consortium makes $9.8bn bid for Australia's APA

Bloomberg’s Prudence Ho reports on CK Group’s bid for APA Group

Group has opened its books to a Chinese consortium after the energy infrastructure operator received a $13 billion takeover proposal.

APA says it received an unsolicited proposal from a consortium led by CK Infrastructure Holdings Limited, made up of CK Asset Holdings Limited and Power Assets Holdings Limited.

According to ABC News, the CK Infrastructure bid will certainly attract the attention of the competition authorities given its stake in Envestra, as well as its majority ownership in yet another gas pipeline operator, DUET Group, which the Chinese company bought for US$5.6 billion (A$7.4 billion) past year.

The bid at $11 a share values APA Group at $12.97 billion.

The move on APA is the latest in a string of takeovers in recent years by CK Infrastructure in Australia, including Duet Group last year and gas distributor Envestra in 2014.

"Based on the indicative price of A$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 Australian.

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

The Foreign Investment Review Board will examine the deal at a time Australia struggles to ensure sufficient natural gas supplies, which has raised sensitivity over control of infrastructure and domestic producers.

APA's gas transmission pipelines span every state and territory on mainland Australia, delivering approximately half of the nation's gas usage, according to its website.

It offered a divestment package which would include APA's interests in the Goldfields Gas Pipeline, Parmelia Gas Pipeline, Mondarra Gas Storage Facility and a stand-alone management team.

Macquarie is advising APA, APA spokesman Patrick Sinclair said.

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