The board of Australian gas pipeline company APA Group, Sydney, has unanimously recommended its shareholders vote for a $12.98-billion (Aus.) takeover offer from Hong Kong firm CK Infrastructure Holdings Ltd. (CKI) and Power Assets Holdings at a meeting scheduled for late November.
The all-cash offer of $11 (Aus.)/share of APA stock was first made in June and represents a 30% premium to APA’s recent trading prices.
APA Chairman Michael Fraser said the offer provides certainty to value for security holders and in the absence of a superior offer the directors intend to vote their own securities in favor of the scheme.
The deal includes an agreement that APA does not enter negotiations with other potential buyers. There also is a break fee of as much as $50 million payable to APA and a reverse break fee of $50 million payable by the CKI consortium.
APA’s pipeline network covers the majority of Australia’s gas transport systems, but as part of the deal CKI has promised to sell APA’s Western Australian assets to retain a competitive status quo in that state.
APA and the CKI consortium have entered an implementation agreement that contains a number of conditions, including the need for approvals by the Australian Foreign Investment Review Board and the Australian Competition and Consumer Commission. The ACCC decision is expected in mid-September closely followed by the FIRB recommendations to the Australian Treasurer.
All going to plan, the takeover is scheduled for completion in mid-December.
Last year CKI acquired the Duet Group, a company with Australian powerlines, gas pipelines, and power stations, for $7.3 billion (Aus.).
