APA TOPS RIVAL BROOKFIELD WITH $10BN OFFER FOR AUSNET

A FRACTIOUS bidding war has broken out for Victorian power grid owner AusNet Services after gas pipeline giant APA Group trumped Canada’s Brookfield with a $10bn bid that would prevent the state’s electricity infrastructure falling into foreign hands.

The takeover battle could be determined by a high bar for Foreign Investment Review Board approval given concerns over whether critical electricity infrastructure should be foreign owned while competition issues could prove a hurdle for APA given its dominant gas market position. If FIRB approves the AusNet offer from Brookfield – along with the current $5.2bn takeover proposal for Spark Infrastructure by KKR – then 100 per cent of Victoria’s electricity distribution and transmission infrastructure would be foreign owned, APA claimed, noting its bid is not subject to such approval.

Foreign investment restrictions could present a major hurdle for Brookfield, UBS said. APA may face its own competition concerns. It already owns 15,000kms of gas pipelines worth $21bn across Australia and delivers half the nation’s gas along with stakes in storage facilities, power stations and wind and solar farms.

APA’s $2.60 a share bid in cash and scrip tops Brookfield’s $2.50 a share cash offer, but the Canadian player already has its nose in front after securing an eight week period of exclusive due diligence on AusNet.

AusNet said on Tuesday it will consider APA’s $2.60 a share bid and left the door open for the pair to hold talks after the due diligence process with Brookfield ends.

APA chief executive Rob Wheals said the tie-up between the two companies would keep a big Australian utility listed on the ASX.

AusNet shares rallied 9.7 per cent to $2.59 on Tuesday, while APA fell 4.7 per cent to $8.46.