Top Australian Gas Distributor Accepts CK Infrastructure $9.45B Offer

One of Australia’s top gas pipeline operator APA Group has accepted a US$9.45-billion (A$12.98-billion) takeover bid made by a consortium led by Hong Kong-based CK Infrastructure. The deal should close by the end of the year if all goes as planned, after APA Group’s board of directors unanimously recommended the deal “in the absence of a superior proposal.”

The consortium, which besides CK Infrastructure also includes CK Asset Holdings and Power Assets Holdings, is still awaiting regulatory approval for the acquisition. In anticipation of this approval, the consortium said earlier this year it will sell all of APA Group’s assets in Western Australia since it already owns the largest gas pipeline in the state: it was part of its acquisition of Australian utility Duet.

When the Hong Kong company first announced its bid, analysts predicted it would have to offload some critical assets in Australia to get regulatory approval for the deal, which some have called “the mother of all monopolies.”

SK Infrastructure already has an extensive presence in the Australian energy market, including stakes in the two largest utilities in Victoria, Citipower and Powercor, and SA Power Networks, the single electricity distributor in South Australia. The Chinese company also holds a 19.3-percent stake in gas pipeline operator Envestra, which serves around a million households and businesses, operating 21,000 km of pipelines.

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APA Group is the second-largest gas pipeline operator in Australia, with 15,000 km to its name servicing 1.3 million households and businesses, mainly along the eastern seaboard.

The Australian Competition and Consumer Commission began to study the deal and its implications for competition on the local gas market in June and will make its findings public next month. Some expect that the watchdog would ask SK Infrastructure to divest some assets in eastern Australia, but others believe the ACCC would be content with just the Western Australia divestment.

By Irina Slav for Oilprice.com

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