Victor Li leads CKI consortium bid for Australian gas pipelines operator

Business | 13 Jun 2018 2:12 pm

A consortium made up of CK Asset Holdings (1113), CK Infrastructure Holdings (1038) and Power Assets Holdings (0006) confirmed today it submitted a bid to acquire Australia's APA Group.

This is the first major acquisition bid by Victor Li Tzar-kuoi since being formally anointed as the successor to the conglomerate his father Li Ka-shing headed. Li retired as chairman of the companies.

The APA Group operates gas pipelines and is listed on the Australian Securities Exchange.

APA says it operates and maintain natural gas pipeline networks connecting 1.3 million Australian homes and businesses. And it owns or have interests in gas storage facilities, gas-fired power stations and wind farms. APA owns and/or manages and operates a portfolio of energy assets in excess of A$20 billion and deliver half of Australia's natural gas usage. 

APA said the company received an unsolicited proposal, from a consortium led by CK Infrastructure Holdings, which is indicative and nonbinding.

APA chairman Michael Fraser said the bid will be evaluated by the board, "and will update APA’s security holders and the market as appropriate.'' He said: "The board believes APA has a very attractive business and is well positioned to continue delivering strong results and ongoing growth irrespective of whether the proposal proceeds to an offer.’

The consortium's bid at A$11 a share, values the APA Group at A$12.97 billion. The company's stapled securities last traded at A$8.27 and the offer is 33 percent above the closing price yesterday.

The APA board considers that it is in the best interests of APA’s security holders to engage further with the consortium, APA said in a statement. The company will allow the Hong Kong consortium to carry out due diligence.

APA's largest shareholder UniSuper, has a 15 percent interest in the company.

APA said that the consortium has informed the company that it has had discussions with and provided information to the Foreign Investment Review Board and the Australian Competition and Consumer Commission. In respect of the Australian Competition and Consumer Commission, 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.

The proposal is not conditional on these proposed divestments occurring before completion of the transaction, APA said.

Based on the indicative price of A$110 cash per stapled security, the APA board considers that it is in the best interests of APA’s security holders to engage further with the consortium, the company said. "Accordingly, APA has entered into a confidentiality agreement with CKI to allow it the opportunity to undertake due diligence on a non-exclusive basis.-The Standard

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