Bloomberg reports that Victor Li, who succeeded his billionaire father last month as head of the CK group of companies, has begun his tenure with a AUS$13 billion (US$9.8 billion) bid for Australian gas pipeline operator APA Group Ltd, the Hong Kong-based conglomerate’s biggest overseas acquisition.
The cash offer, split among CK Asset Holdings Ltd., CK Infrastructure Holdings Ltd. and Power Assets Holdings Ltd., was 33% higher than APA’s closing price yesterday.
APA shares surged as much as 24% to AUS$10.29 in Sydney trading, a record gain but shy of the AUS$11 per share bid.
The purchase would give Li a company that delivers about half of the nation’s gas and add to an Australian portfolio that already includes power distributor Duet Group.
The deal would also represent more opportunity to diversify away from the UK, the CK empire’s biggest market, amid uncertainties tied to the country’s looming separation from the European Union.
The purchase of APA, whose pipelines span every state and territory on mainland Australia, is subject to regulatory approvals.
The Foreign Investment Review Board will examine the deal at a time Australia struggles to ensure sufficient natural gas supplies, which has raised sensitivity over control of infrastructure and domestic producers. Australia has encountered blackouts and rising energy costs amid a bungled transition away from coal that has left consumers with some of the highest power prices in the world.
The CK companies have held talks with the FIRB and the country’s antitrust regulator and offered to sell some assets, including APA’s interests in the Goldfields Gas Pipeline, Parmelia Gas Pipeline, Mondarra Gas Storage Facility.
Rising LNG exports and regional drilling bans have been blamed for tightening supply, forcing Prime Minister Malcolm Turnbull to threaten limiting overseas sales and sparking efforts to begin importing LNG in high-demand areas.
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