SYDNEY (Reuters) - Australian gas pipeline owner Envestra Ltd ENV.AX sought to delay a shareholder meeting to vote on a A$2.06 billion ($1.93 billion) takeover bid by larger rival APA Group after firms associated with Li Ka-shing lobbed a higher eleventh hour offer.
Companies in billionaire Li’s Hong Kong-based Cheung Kong Group - Envestra’s second biggest shareholder after APA (APA.AX) - escalated what has been a months-long standoff over control of the company by offering A$2.37 billion, or A$1.32 per share, late on Thursday. CK Group had until then opposed the APA bid.
On Friday, shares in Envestra rose as much as 20 percent with trades as high as A$1.365 as investors betted on a higher second offer by APA. An APA spokesman declined to comment on the CK Group bid, but said any rival offer gave APA the right to change what had been its final offer.
“My guess is they’ll probably come back with a new bid. Maybe they’ll throw a bit of cash on top of that as well and in my view that would be a superior offer,” Rivkin Securities director Shannon Rivkin said.
Envestra, which has previously recommended the APA offer, told the Australian Securities Exchange that it would ask the Federal Court on Friday for permission to delay a shareholder meeting to vote on the APA bid, originally scheduled for May 13.
The company is the latest in a series of overseas infrastructure businesses targeted by Li’s empire as he cuts his exposure to Hong Kong, where opportunities for expansion are becoming limited. Li began building his conglomerate in the former British colony some 64 years ago.
The tycoon’s companies have raised about $9 billion by selling stakes in Hong Kong firms. Analysts expect a part of the proceeds to be used for buying overseas businesses.
Just last month, local media reported that Cheung Kong Infrastructure tried but failed to buy Australia’s Port of Newcastle from the New South Wales state government. The asset went to China Merchants and Australia’s Hastings Funds Management for A$1.75 billion instead.
Li’s interest in Envestra also suggests a growing focus on infrastructure in Australia, where the Federal Government is offering state governments cash bonuses to sell infrastructure and provide cash for much-needed upgrades to roads and other infrastructure projects.
The CK Group tilt for Envestra comes amid an increase in mergers and acquisitions activity by Chinese interests targeting Australian resources-related companies.
On Monday, Baosteel and Australian rail company Aurizon Holdings Ltd (AZJ.AX) made a A$1.14 billion bid for Aquila in a move that could help it secure supply and rely less on top suppliers Vale (VALE5.SA), Rio Tinto (RIO.AX) and BHP Billiton
AMP Capital Investors, Envestra’s biggest shareholder after the two takeover rivals, declined to comment. ($1 = 1.0670 Australian Dollars)
Additional reporting by Thuy Ong; Editing by Ryan Woo