Australia Rejects CKI Bid for APA
The Australian government has rejected Hong Kong-based CK Infrastructure Holdings’ A$13bn (US$9.8bn) takeover of gas infrastructure company APA Group calling the deal “contrary to the national interest”. The takeover offer was first announce in June this year.
“Today I have advised the consortium led by CK Asset Holdings Limited (CK Group) of my preliminary view that its proposed acquisition of APA Group would be contrary to the national interest. I have formed this view on the grounds that it would result in an undue concentration of foreign ownership by a single company group in our most significant gas transmission business,” Treasurer Josh Frydenberg said in a statement November 7, adding he intend to make a final decision under the formal process within two weeks.
In September, Australia’s competition watchdog, the Australian Competition and Consumer Commission (ACCC), greenlit the proposed acquisition. The ACCC accepted a court-enforceable undertaking from the CK Consortium to divest significant gas assets in Western Australia, which quelled its concerns about the impact from the takeover to competition within the state.
Frydenberg said he formed the "preliminary" view after close consultation with the Foreign Investment Review Board (FIRB) and the Critical Infrastructure Centre (CIC). “The concentration of foreign ownership was not a question considered by the ACCC’s assessment of this proposed acquisition. The FIRB was unable to reach a unanimous recommendation, expressing its concerns about aggregation and the national interest implications of such a dominant foreign player in the gas and electricity sectors over the longer term,” he said.
The APA Group is the largest gas transmission system owner in Australia, owning 15,000 km of pipelines representing 56% of Australia’s gas pipeline transmission system, including 74% of New South Wales and Victorian pipelines and 64% in the Northern Territory. It also supplies gas for part of all mainland capital cities’ consumption, gas-fired electricity generation assets and LNG exports.
“My preliminary view reflects the size and significance of APA Group. It is about the extent to which the proposal is consistent with Australia’s national interest. The application of our foreign investment policy, expressed through my preliminary view, is not discriminatory against any investor or country,” Frydenberg added.
In October APA chairman Michael Fraser said that if the transaction does not proceed, the company will continue on with its growth strategy.