Cheung Kong Infrastructure expects FIRB tick for $7.5bn takeover of Duet

Billionaire Li Ka-shing, head of Cheung Kong Infrastructure. Pic: Bloomberg

Cheung Kong Infrastructure deputy managing director Andy Hunter says he is confident the Foreign Investment Review Board will approve its $7.5 billion takeover bid for pipeline, distribution and power company Duet Group, despite Treasurer Scott Morrison knocking back CKI’s bid for NSW power distributor Ausgrid last year.

Mr Hunter said CKI, which is controlled by Hong Kong billionaire Li Ka-shing, had been talking to FIRB about the deal for “a couple of months”.

“We’re well down the process,” he told The Australian.

“It’s not done until it’s done, but we have confidence we’ll get the approval otherwise we wouldn’t have made this offer and I suspect the Duet board wouldn’t have accepted.”

Duet on Monday said that it had entered into a scheme implementation agreement with a Cheung Kong-led consortium, which would pay $3.03 in cash per stapled security for the company, up from an initial approach of $3 in December that had opened the doors to due diligence.

To go through, the deal will need the approval of both shareholders and the Foreign Investment Review Board, who last year blocked CKI, which is controlled by billionaire Li Ka-shing, from taking a majority stake in NSW government sale of Ausgrid.

UniSuper, Duet’s biggest security holder with 16 per cent, on Monday gave public support for the deal.

“We are comfortable with the Duet board’s recommendation,” UniSuper chief investment officer John Pearce said.

Duet has tapped KPMG Corporate Finance as an independent expert to review the deal ahead of a shareholder vote, while it is also dependent on receiving approval from the Foreign Investment Review Board.

Last year, CKI was blocked by Treasurer Scott Morrison from buying NSW electricity distribution company Ausgrid through a high-profile auction.

The proposed deal will see Duet shareholders receive $3 per stapled security and a 3c special dividend.

At 2.46pm (AEDT), Duet stapled securities had surged 16c, or 5.8 per cent to $2.94.​

“Duet’s boards consider that the total cash proceeds of $3.03 per stapled security, inclusive of a special distribution payment by Duet, fully recognise the value and future growth platform that our management team has created and the operating and financing synergies available to the consortium,” independent chairman Doug Halley said.

Duet said it currently expected the deal to complete in mid-May.