The Australian government has decided against the Hong Kong-based CK Group’s $13-billion (Aus.) bid to acquire Sydney-based gas pipeline operator APA Group citing national security concerns.
Treasurer Josh Frydenberg said the proposed acquisition of APA lead to an undue concentration of foreign ownership by a single company group in one of Australia’s most important gas transmission businesses. Frydenberg added that he would make a final decision within 2 weeks.
CK Group is headed by Hong Kong businessman Victor Li. If the acquisition had gone through, CK would control pipelines that deliver half of the country’s gas. CK’s portfolio in Australia already includes power distributor Duet Group.
Frydenberg was quick to point out that his preliminary view was not an adverse reflection on CK Group or the individual companies, saying that the government welcomes CK Group’s investments in Australia and its broader contribution to the Australian economy.
The knockback comes despite the deal being cleared by the Australian Competition and Consumer Commission (ACCC) in September after CK Group agreed to sell natural gas pipeline and storage infrastructure assets in Western Australia to allay monopoly fears. However, Frydenberg said concentration of foreign ownership was not a question looked at by the ACCC.
The Australian Foreign Investment Review Board assessed the deal for the government. It did not reach a unanimous decision but did express concerns about aggregation and the national interest implications of such a dominant player in the gas and electricity sectors over the long term.
CK Group has previously been blocked when its bid for the electricity network Ausgrid was declined in 2016 on similar grounds of undermining national security.
