Three companies controlled by tycoon Li Ka-shing launched an A$2.37 billion (HK$17.2 billion) takeover bid for the Australian gas distribution firm Envestra, trumping an offer by its largest shareholder APA Group.
Cheung Kong (Holdings), Cheung Kong Infrastructure (CKI) and Power Assets Holdings have formed a consortium for an "indicative, non-binding and conditional" all-cash offer to buy all Envestra shares it does not already own at A$1.32 each, Envestra said in a statement to the Australian stock exchange.
The offer is at a premium of 16.8 per cent to the last traded price of Envestra shares, A$1.13 at the close on Wednesday, and compares to the A$1.17 implied value of APA's cash-and-shares bid.
CKI currently owns 17.46 per cent and is the second largest shareholder of Envestra. The bid is subject to approval by Australia's Foreign Investment Review Board, and consent from Envestra's financiers. It will only go through if the three Li-controlled firms get more than 50 per cent of acceptance from Envestra shareholders.
Gas pipelines operator APA, with more than A$12 billion of energy assets, has a 33.4 per cent stake in Envestra. Last December, it tabled a sweetened offer to buy out other shareholders by offering them APA shares, or a combination of its shares and cash.
CKI representatives on Envestra's board, Dominic Chan and Ivan Chan, recommended in March that other Envestra shareholders vote against APA's offer. Shareholders will vote on May 13.
Cheung Kong is a Hong Kong property developer. CKI owns power, water, gas utilities and transport infrastructure projects. Power Assets mainly invests in electricity businesses.
Set up in 1997, Envestra operates natural gas distribution networks under regulated monopolies in major cities in the states of Victoria, South Australia and Queensland, as well as smaller ones in New South Wales and the Northern Territory. It has some 23,000 kilometres of distribution networks, 1,100km of transmission pipelines and 1.14 million customers.
Late 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.