APA Group keeps AusNet $10bn takeover bid on table pending Takeover Panel ruling
APA will keep its $10bn bid for AusNet on the table until the takeovers panel responds to its call for the termination of rival Brookfield’s exclusive due diligence process.
Gas pipeline giant APA Group has refused to back down over the $10bn takeover battle for AusNet Services, saying its bid will remain on the table until the Australian Takeovers Panel decides if rival bidder Brookfield’s exclusive due diligence process should be axed.
The move comes after APA initiated a war of words last week when AusNet granted Canadian investment firm Brookfield Asset Management exclusive access to its books, with APA considering its $2.60 a share cash and scrip offer superior to Brookfield’s firm $2.50 a share bid.
APA said Wednesday that its offer — which is split between $1.82 a share in cash and .0878 APA shares for each AusNet share — would remain on the table until the takeover panel makes a decision, even though the bid was set to expire on Tuesday.
“The superior proposal was conditional on, among other things, confirmation by Tuesday 28 September 2021 from AusNet that APA will be granted due diligence access,” APA said in a statement.
“APA confirms that it has advised AusNet and undertaken to the Takeovers Panel that the deadline for AusNet to confirm that APA will be granted due diligence access under the Superior Proposal will be extended for so long as the Panel Application remains under review.”
APA said it had received “positive feedback from both APA securityholders and AusNet shareholders” regarding its proposal for AusNet, which owns and operates the Victorian electricity transmission network alongside gas and power distribution.
The takeover panel is expected to reach a decision this week.
APA’s biggest shareholder Unisuper with a near 14.3 per cent stake said it supported APA extending the offer.
“Yes, we are supportive,” Unisuper chief investment officer John Pearce said.
“We maintain that it’s in shareholder’s interests that the board of AusNet allow all interested parties to conduct due diligence in order to facilitate a fair and competitive process.”
AusNet is still weighing the merits of APA’s higher bid and has left the door open for the pair to hold talks, but only after Brookfield’s due diligence process ends.
APA has made no secret of its frustration that AusNet opened its books to Brookfield as it made its first $2.32 a share bid on September 1, one day after Brookfield’s first tilt, before letting AusNet know on September 16 it would revert back after a board meeting four days later.
However, AusNet went with Brookfield’s firm cash offer, managing to bump the bid up to $2.50 by offering exclusive access to its books.
APA has argued its offer would be more beneficial for AusNet shareholders, creating “Australia’s largest energy transmission and distribution infrastructure utility” with a combined enterprise value of $35bn and total assets of $29bn.
It said the enlarged group would have the “scale and capability” to “accelerate the $20bn growth in electricity transmission infrastructure needed to support the decarbonisation of Australia’s economy.”
APA has accused Brookfield of having no platform to expand AusNet beyond Victoria and raised the spectre of Foreign Investment Review Board hurdles to the takeover.
But Brookfield has rejected the claims made by APA, pointing to the size of its global business with $US626bn ($862bn) under management and a history of successful deals in Australia including infrastructure group Asciano and Healthscope, while its stewardship of AusNet’s assets would also accelerate decarbonisation.
It has also pointed to potential hurdles in APA’s deal gaining ACCC clearance, and sees pressure around APA’s legacy gas business accelerating due to environment, social and governance risks.
AusNet Services is 32.3 per cent owned by Singapore Power, 19.9 per cent owned by State Grid of China, and around 48 per cent publicly owned.
APA shares were up 1.6 per cent to $8.73 in a lower market on Wednesday mid-morning, with AusNet down 0.2 per cent to $2.54.