Adelaide-based natural gas distributor Envestra has backed a $2.37 billion takeover bid from Hong Kong consortium Cheung Kong Group.
The $1.32-cash-per-share bid trumped an earlier offer from another Australian gas infrastructure business, APA Group.
Cheung Kong’s surprise move on May 9 forced Envestra to cancel a shareholder meeting that had been scheduled to consider the APA offer.
Today’s statement from the Envestra board backs the CK bid and incorporates into a bid agreement for an off-market takeover offer, which directors are recommending shareholders accept instead of the APA offer.
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Envestra shareholders will also be entitled to Envestra’s final dividend of up to 3.5¢ per security, without any reduction in the offer price.
The acquisition of Envestra will add to Cheung Kong’s existing regulated assets in Australia, including SA Power Networks in South Australia, CitiPower and Powercor in Victoria.
The offer is subject to 50 per cent acceptances from Envestra shareholders, leaving scope for Envestra’s largest shareholder APA Group to remain a shareholder.
“Given that 80 per cent of Envestra’s gas coverage is in South Australia and Victoria, the acquisition would enable us to further share our expertise and to explore opportunities for synergy,” Cheung Kong Infrastructure managing director HL Kam said in the statement.
Shares in Envestra jumped on the news this morning, trading at $1.36 at 11.30am.
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Cheung Kong already has a 17.46 per cent interest in Envestra and the offer is subject to the suitor gaining an interest of more than 50 per cent, as well as Foreign Investment Review Board approval.
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