APA Group Raised the Offer on Hastings
The stakes in a bidding war for greater control of Australia's network of natural gas pipelines were raised another notch Thursday after APA Group (APA) sweetened its offer for Hastings Diversified Utilities Fund Ltd. (HDF.AU).
APA, which already owns about 20% of the target, said it's offering 62 Australian cents cash and 0.39 APA shares for every Hastings Diversified security it doesn't already own. Based on APA's closing price Wednesday, the fresh offer values the company at about A$2.51 a security, or A$1.33 billion (US$1.41 billion).
A rival all-cash offer of A$2.325 a security from Pipeline Partners Australia, a consortium made up of Australian and Canadian pension funds, had already been recommended by Hastings Diversified's independent directors in the absence of a superior proposal.
The takeover tussle comes after Australia introduced in July a carbon tax to encourage the use of fuels that burn cleaner than coal such as natural gas. Australia is also in the midst of a boom in natural gas demand from nearby Asian countries, including China, and has about a dozen gas-export terminals planned for its coastline.
Directors will meet to consider the terms of APA's fresh offer, Hastings Diversified said in a statement Thursday. It wouldn't have taken them off guard, given APA lat month flagged in its intention to offer at least A$2.50, comprising at least 60 cents cash.
A spokesman for Pipeline Partners Australia said it has noted APA's announcement and will comment further once it sees a response from Hastings Diversified's independent directors.
APA has promised Australia's corporate regulator that it will sell the Moomba-to-Adelaide pipeline system, currently owned by Hastings Diversified, if it completes any takeover in order to win its blessing.
Sydney-based APA, which is Australia's biggest owner of gas pipelines, on Thursday launched a A$350 million subordinated note issue it said could help pay for any acquisition.