| SYDNEY, March 5
SYDNEY, March 5 Hong Kong investment firm Cheung
Kong Infrastructure Holdings Ltd may block Australian
gas transporter APA Group's A$2.06 billion ($1.84
billion) takeover of smaller rival Envestra Ltd, two
people with knowledge of the matter told Reuters.
In a statement to the Australian Stock Exchange on Tuesday,
Envestra said it recommended the takeover but added that two of
its directors, CKI Chief Financial Officer Dominic Chan and CKI
Chief Planning and Investment Officer Ivan Chan, "do not
consider the Scheme to be in the best interests of Envestra
The CKI executives did not say why they oppose the sale but
they must explain their position in a scheme booklet Envestra
plans to send to shareholders in the next three weeks, said the
sources who declined to be named because they were not
authorised to speak about the deal.
The CKI executives may not oppose the sale outright and may
demand a higher price, the sources said. CKI executives could
not immediately be reached for comment.
An unravelling of the deal would be a surprise blow to APA,
which distributes about half Australia's gas and wants to
broaden its reach. In 2012, it paid A$1.4 billion for Hastings
Diversified Utilities Fund.
CKI holds a 17.46 percent stake of Envestra, according to
Reuters data. For the deal to go ahead, more than 75 percent of
non-APA shareholders must support the sale. CKI's holding
amounts to about 26 percent of non-APA shares, which means its
approval is necessary.
In its statement, Envestra said it asked CKI how it would
vote but "CKI has advised Envestra that it does not currently
intend to make a public statement regarding its voting
Envestra shares were trading around 3 percent higher on
Wednesday, having fallen sharply on Tuesday on fears the deal
may not proceed. APA shares were flat at A$6.57.
Envestra plans to ask shareholders to vote on the deal in
($1 = 1.1176 Australian dollars)
(Reporting By Byron Kaye; Editing by Miral Fahmy)