Australia’s APA Group, which bills itself as the country’s “largest natural gas infrastructure business”, has tabled a take over bid for the remainder of the Hastings Diversified Utilities Fund (HDF) it doesn't already own valuing HDF at an enterprise value of circa A$1.8 billion (€1.4 billion; $1.8 billion).
APA already owns 20.7 percent of HDF and is offering A$2.00 per HDF security for the rest – a 20.6 percent premium to HDF’s three-month volume-weighted average price, according to APA.
Hastings Funds Management, HDF’s manager, has acknowledged APA’s proposal, with chairman Alan Cameron stating: “We are carefully considering the terms of the proposed takeover offer by APA for HDF and we will comment as soon as our assessment of the proposed offer has been completed.”
If HDF’s board and shareholders eventually accept APA’s offer, the combined group would have a market capitalisation of some A$3.6 billion and own and operate over 15,000 kilometres of gas transmission pipelines across Australia. APA’s offer is conditional on an acceptance rate of at least 90 percent of HDF’s security holders and will be open until March 31, 2012.
To help fund the takeover bid, APA has completed the sale of a majority stake in its regulated Queensland gas distribution business – known as Allgas – to RREEF and Marubeni for a net enterprise value of A$526 million. The deal will see Allgas moved into a new holding structure in which RREEF and Marubeni hold 40 percent each, with APA retaining the remaining 20 percent. APA will, however, continue to operate the asset under a 10-year agreement.
APA expects to net about A$477 million from the Allgas sale – roughly equivalent to 15 times the asset’s 2011 earnings before interest, tax, depreciation and amortisation (EBITDA) – and will use the money to pay down debt and fund the HDF takeover.
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