Antitrust Regulator Clears $9 Billion Chinese Bid for Australia Pipeline Company
By Robb M. Stewart
MELBOURNE, Australia--Australia's antitrust regulator won't stand in the way of a more than US$9 billion takeover of one of the country's main gas-pipeline operators, putting the deal by Hong Kong's CK Infrastructure Holdings Ltd. (1038.HK) in the hands of foreign investment authorities.
The Australian Competition and Consumer Commission on Wednesday said it wouldn't oppose the acquisition of APA Group (APA.AU) after accepting plans from a CKI-led consortium to offload assets that would otherwise have meant a threat to competition when APA was merged with existing operations in the country.
Rod Sims, chairman of the regulator, said concerns had been raised in the industry about APA's dominance in gas transmission, but a takeover wouldn't alter that in a material way.
In mid-August, APA's board agreed to a formalized bid from the consortium worth 12.98 billion Australian dollars ($9.24 billion).
APA operates more than 9,000 miles of gas pipelines in Australia that connect to 1.3 million homes and businesses, and owns or has interests in gas-storage facilities, gas-fired power stations and wind farms.
The deal still needs the recommendation of the Foreign Investment Review Board, and some analysts have said that may be a bigger hurdle for the consortium to clear. Investment-research firm Morningstar this month said it expected the deal would be blocked since it would mean the majority of Australia's gas transmission network would effectively be owned by Chinese companies, a concentration likely to make the government nervous ahead of a federal election in 2019.
In 2016, the Australian government blocked offers from State Grid Corp. of China and CKI to buy a majority stake in Ausgrid, an electricity network, on national security grounds. Malcolm Turnbull, who recently was replaced as leader of his party and prime minister, had said the country remained open to foreign investment, including from China, although acquisitions have become increasingly closely vetted.
CKI already is one of the largest foreign investors in Australian infrastructure. It owns SA Power Networks, an electricity distributor in South Australia state, Melbourne electricity supplier CitiPower, gas distributor Australian Gas Networks Ltd. as well as an electricity distributor and a renewable-energy transmission business in Victoria state. Last year, Canberra allowed it to buy utility Duet Group in a deal worth A$7.3 billion.
The offer from CKI, CK Asset Holdings Ltd. (1113.HK) and Power Assets Holdings Ltd. (0006.HK) is worth A$11 a share in cash. It will be raised by 4 Australian cents a share for each month that passes in early 2019 if the deal hasn't yet been implemented.
APA has said it expects to put the deal to a shareholder vote in November, depending on the progress of regulatory approvals.
Write to Robb M. Stewart at firstname.lastname@example.org
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September 11, 2018 20:14 ET (00:14 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.