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Cheung Kong’s $5.5bn bid accepted by Duet boards

Investment arms of Hong Kong’s richest man are proposing to take over the Australian energy asset manager five months after CKI’s attempt to buy a grid Down Under was rejected by the government.

A consortium comprising three companies owned by Asian billionaire Li Ka-shing has proposed to purchase Duet Group, an energy utility owner and operator in Australia, for A$7.4 billion ($5.53 billion; €5.21 billion). 

Cheung Kong Property has formed a wholly-owned subsidiary for the acquisition, to which Cheung Kong Infrastructure and Power Assets respectively agreed to subscribe 40 percent and 20 percent, pending necessary approvals. 

The joint venture has offered to buy Duet’s stapled shares at A$3 per share, and the boards of Duet unanimously recommended that the group’s shareholders vote in favour of the bid. Completion of the transaction, however, remains subject to approvals by Duet’s shareholders and Australia’s Foreign Investment Review Board. 

CKI said Duet’s energy utility assets present an attractive investment opportunity, offering both long-term, steady income through its regulated and contracted revenue and good growth potential. 

Duet owns and operates energy utility assets in Australia, the US, the UK and Europe. Among its major assets feature Multinet Gas, a gas distribution business in Victoria; United Energy, an electricity distribution business, also in Victoria; and Dampier Bunbury Pipeline, a gas transmission pipeline in Western Australia. The company also manages an international portfolio of over 900MW of clean energy generation through Energy Developments, a wholly-owned subsidiary. 

“Given the cyclical nature of the local property market, CKP is actively pursuing quality global investment opportunities with a view to extending reach in to new business areas to enhance revenue streams,” the consortium said, adding that CKP would benefit from partnering with CKI and Power Assets as it marches into a new business area. 

The investment would allow CKI to tap into its two partners’ hefty cash pile while also enabling Power Assets to expand its existing electricity networks. 

CKI’s unsolicited bid for Duet, initially placed last month, is the Hong Kong firm’s second attempt to acquire Australian infrastructure assets. Last August, its bid for Ausgrid, the country’s largest electricity distribution company, was blocked by the Australian government. A rival bid by China’s State Grid was also rejected.