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Li firms set to take over Envestra as rival bidder sells them its shares

Cheung Kong group wins over rival bidder with cash offer of A$1.32 per share, giving it 72pc control of natural gas distributor Envestra

PUBLISHED : Thursday, 07 August, 2014, 10:27am
UPDATED : Friday, 08 August, 2014, 8:34am

The main obstacle has been cleared for a consortium controlled by Li Ka-shing, Asia's richest man, to acquire Envestra, one of Australia's largest distributors of natural gas.

APA, Australia's largest natural gas infrastructure company, has abandoned its own takeover bid and agreed to sell its one-third stake in Envestra to the consortium at its cash offer of A$1.32 (HK$9.48) per share, Envestra said yesterday.

The Li companies - Cheung Kong Infrastructure Holdings, Power Assets Holdings and parent firm Cheung Kong (Holdings) - will pay A$784 million for APA's 594 million Envestra shares.

Prior to the transaction, the group owned 39.14 per cent of Envestra. It will now own more than 72 per cent.

"The cash offer by the consortium well exceeded our valuation of the Envestra business, even at full ownership," APA managing director Dick McCormack said in a statement. "While our rationale for owning the Envestra business remains sound, APA assessed the value proposition of the offer and concluded that selling out of this investment and redeploying the proceeds in other opportunities will provide better longer-term value for APA security holders."

Cheung Kong shares yesterday closed 0.07 per cent lower at HK$143.10, while CKI rose 0.54 per cent to HK$55.40 and Power Assets added 1.94 per cent to HK$70.80. The Hang Seng Index slid 0.8 per cent.

Set up in 1997, Envestra operates natural gas distribution networks in the states of Victoria, South Australia, Queensland, New South Wales and the Northern Territory. It has 23,000km of distribution networks, 1,100km of transmission pipelines and 1.14 million customers.

Li's companies have been acquiring overseas regulated businesses with steady long-term returns in Ireland and Canada among others, while selling major stakes in key businesses in Hong Kong. He has repeatedly denied gradually divesting out of the city.

CKI and Cheung Kong in May agreed to pay C$347.56 million (HK$2.4 billion) for an airport parking business in three Canadian cities. In 2012, the same three Li-controlled firms and Li Ka Shing Foundation jointly bought all of British gas distributor Wales & West Utilities, gaining control of a quarter of that country's gas network.

Power Assets in January cut its stake in power supplier Hongkong Electric Holdings by 50.1 per cent through an initial public offering of trust unit HK Electric Investments.

In 2011, Li spun off Hutchison Port Holdings Trust on the Singapore stock exchange, and in March this year the trust sold 60 per cent of Hong Kong Terminal 8 West for HK$2.47 billion to two mainland shipping conglomerates.

A 25 per cent stake in his retail arm AS Watson was sold in March to Singapore's sovereign wealth fund Temasek for HK$44 billion.

Li late last year also sought to sell the ParknShop supermarket chain but the plan was subsequently abandoned.

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