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Hong Kong conglomerate CK Group’s US$9.4 billion bid for gas pipeline operator blocked by Australia

  • Treasurer Josh Frydenberg says buyout of APA Group against ‘national interest’

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Treasurer Josh Frydenberg said the deal would lead to undue concentration of foreign ownership by a single company in one of Australia’s most significant gas transmission businesses. Photo: Handout

CK Group’s A$13 billion (US$9.4 billion) bid for gas pipeline operator APA Group was knocked back by Australia’s government on national security grounds, a decision that has the potential to further inflame diplomatic tensions with China.

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“I have advised the consortium led by CK Asset Holdings of my preliminary view that its proposed acquisition of APA Group would be contrary to the national interest,” Treasurer Josh Frydenberg said on Wednesday.

New CK Hutchison boss Victor Li makes second bold move in a week, with US$10 billion offer for Australian gas pipeline firm APA

His view was based on concerns it would lead to an undue concentration of foreign ownership by a single company group in one of the country’s most significant gas transmission businesses. Frydenberg said he would make a final decision within two weeks.

In response, CK Group said: “The CK Group notes the specific reference in today’s announcement that the Treasurer’s preliminary view reflects the size and significance of the APA Group, which is by far the largest gas transmission system owner in Australia; and that the preliminary view is not an adverse reflection on the CK Group, and the Australian government welcomes CK Group’s investments in Australia and its broader contribution to the Australian economy.”

The decision scuppers the Hong Kong-based conglomerate’s biggest overseas deal, which would have given it control of pipelines that deliver about half of Australia’s gas. Rising electricity prices and blackouts have made energy security a hot political issue in the country, and an overseas acquisition of critical infrastructure would have been sensitive for Prime Minister Scott Morrison’s government.

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Morrison, who served as treasurer before becoming prime minister in August, has blocked several deals involving China-linked companies in the past three years, drawing ire from the government in Beijing. Ties between the two countries have been strained since December after the government implied China was meddling in Australian politics and media.

Flags of CK Hutchison Holdings in Hong Kong’s Central district. CK Group said on Wednesday the ruling was ‘not an adverse reflection’ on it. Photo: Nora Tam
Flags of CK Hutchison Holdings in Hong Kong’s Central district. CK Group said on Wednesday the ruling was ‘not an adverse reflection’ on it. Photo: Nora Tam
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