Australia knocks back CKI pipeline bid, citing national security

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

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

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 countries most significant gas transmission businesses. Frydenberg said he would make a final decision within two weeks.

The decision scuppers the Hong Kongbased 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 nation, and an overseas acquisition of critical infrastructure would have been sensitive for Prime Minister Scott Morrison’s government.

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 nations have been strained since December after the government implied China was meddling in Australian politics and media.

As the most China-dependent developed economy, Australia potentially has a lot to lose should relations with its biggest trading partner deteriorate further. Wine companies complained earlier this year that the frayed ties were behind shipments being delayed at Chinese ports.

CK Group’s cash offer was split among subsidiaries CK Asset Holdings Ltd, CK Infrastructure Holdings Ltd and Power Assets Holdings Ltd. It was cleared in September by the competition regulator, after the conglomerate agreed to sell natural gas pipeline and storage infrastructure assets in Western Australia to appease anti-trust concerns.

CK, whose Australian portfolio includes power distributor Duet Group, has been blocked in the nation before. The government rejected a bid by CK Infrastructure in 2016 for the electricity network Ausgrid. — Bloomberg