By David Winning
SYDNEY--APA Group set a deadline of one week for AusNet Services Ltd. to allow due diligence access after saying it's willing to trump an existing takeover proposal made by Brookfield Asset Management Inc.
APA said it has made a non-binding proposal to acquire AusNet for 9.96 billion Australian dollars (US$7.22 billion), or A$2.60 a share using a mix of cash and its own stock. The implied offer is higher than the A$2.50-a-share proposal made by Brookfield, which AusNet said on Monday that it intends to recommend to shareholders.
APA said it initially approached AusNet about a deal worth A$2.32 a share on Sept.1 , and had discussed that offer directly with State Grid Corp. of China, AusNet's second-largest shareholder, beforehand.
"APA understands that Singapore Power was supportive of APA and AusNet engaging in discussions to determine whether a transaction could be agreed," the company said. Singapore Power owns around a third of AusNet's equity.
According to a regulatory filing, APA said it had told AusNet on Sept. 16 that it intended to make a revised proposal.
"APA is disappointed that AusNet has purported to enter into a period of exclusivity with Brookfield for effectively eight weeks, notwithstanding AusNet's knowledge of the pending revised, and potentially superior proposal, from APA," it said.
APA listed several reasons why it believes the revised proposal is better than Brookfield's bid, including a higher price and the opportunity for AusNet's investors to reap benefits from combining the businesses via its own listing on the Australian Securities Exchange.
"Unlike many OECD countries, Australia lacks a locally owned and controlled energy utility with capabilities across critical energy infrastructure and with the size and strength to partner with government and the community to deliver the energy transition," said APA Chief Executive Rob Wheals.
APA said it expected to raise around A$1.5 billion of new equity to fund a deal if terms can be agreed, and that the capital raising would be underwritten.
"The superior proposal is conditional on, among other things, confirmation by Tuesday, September 28 from AusNet of granting due diligence access, completion of a targeted due diligence review and entry into a satisfactory scheme implementation deed," APA added.
Write to David Winning at email@example.com
(END) Dow Jones Newswires