UPDATE 1-Australia's Envestra declares dividend, defying suitor CKI in $2 billion takeover

Fri Jul 11, 2014 7:25am EDT

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(Adds comment from CKI)

By Byron Kaye

SYDNEY, July 11 (Reuters) - Australian gas pipeline owner Envestra Ltd on Friday declared a final dividend earlier than planned, potentially throwing into doubt a A$2.2 billion ($2.1 billion) takeover offer from Hong Kong's Cheung Kong Infrastructure Holdings Ltd (CKI).

Envestra's directors have recommended the May 9 offer from billionaire Li Ka-shing's company, but both companies recently revealed they disagreed on the date when the Australian takeover target would declare its final dividend.

Envestra wanted to bring the date forward to July 11 - Friday - to ensure enough shareholders voted in favour of the deal. CKI objected, saying it would interfere with its accounting timetable. CKI wanted the dividend paid in August.

Friday's move by Envestra means CKI, which would get about A$60 million in dividends as Envestra's No.2 shareholder with 17.5 percent of its stock, must now decide if it is prepared to proceed with the non-binding offer regardless of its objection.

"I don't think CKI would drop the offer, (but) they might reduce it by the dividend amount," said a Sydney stock analyst who did not want to be named because of the sensitivity of the situation.

CKI issued a statement reiterating that its bid had not changed, and all the terms and conditions were stipulated in the bidder's statement sent a week ago.

Envestra had previously taken the dispute to the country's Takeovers Panel seeking a declaration of "unacceptable circumstances". The regulatory body dismissed the complaint, saying neither party had deviated from the agreement.

In a statement to the Australian Securities Exchange on Friday, Envestra declared a final dividend of A$0.035 ($0.03), adding that its directors "continue to recommend that Envestra shareholders accept the takeover offer" from CKI.

In a July 2 statement, CKI said it "does object to the declaration and payment of a dividend on an accelerated timetable from that foreshadowed in Envestra's financial calendar".

Shares of Envestra closed flat at A$1.36 in a higher overall market.

($1 = 1.0654 Australian dollars) (Additional reporting by Lincoln Feast; Editing by Matt Driskill and Mark Potter)

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