A consortium made up of three listed firms controlled by tycoon Li Ka-shing has agreed to offer up to A$7.53 billion (HK$43.8 billion) to fully take over Australian electricity and natural gas distributor Duet Group.
For the transaction, the three firms agreed to form a joint venture in which Cheung Kong Property Holdings and Cheung Kong Infrastructure (CKI) will each own 40 per cent, while Power Assets will have a 20 per cent stake, if the joint venture is approved by all three companies’ independent shareholders. The shareholding structure may change depending on the outcome of the approvals.
“The consortium members believe that the target’s energy utility assets in Australia, the United States, the United Kingdom and Europe represent an attractive opportunity for investors with the potential for growth opportunities,” CKP, CKI and Power Assets said in a joint filing to Hong Kong’s exchange on Monday.
CKI was the first Li-led company that made what Duet called an “unsolicited, indicative, incomplete, non-binding and conditional proposal” just over a month ago.
Duet said in a filing to Australia’s stock exchange on Monday that its board has “unanimously” recommended its shareholders to accept the consortium’s offer. The offer was 28.9 per cent higher than Duet’s closing price prior to the indicative offer last month. It represents a 13.1 enterprise value to earnings before interest, taxes, depreciation and amortisation (ebitda) multiple.
Credit Suisse analysts estimated in a note on Monday that the acquisition could raise CKI’s earnings per share by 3 per cent in 2017, and that of Power Assets by 2 per cent, after considering the deal’s financing cost.