Gas pipeline owner APA Group will be reading the fine print of the scheme documentation released yesterday for its $2.1 billion deal to buy South Australian distributor Envestra.
As the market waits to see if APA will lift its bid after it was opposed by Envestra’s cornerstone shareholder Cheung Kong Infrastructure, the documents -- which were dispatched to shareholders yesterday -- for the first time provide the reasons why CKI knocked back APA’s bid.
The directors Dominic and Ivan Chan, who represent the 17.5 per cent stake in Envestra owned by CKI, claim APA has a different risk and financial profile than Envestra.
Dominic Chan notes that “APA Group has assets that are to a large extent unregulated and have a different and more volatile risk profile than Envestra’s assets’’.
He also says the absence of a substantially higher proportion of cash consideration “is not desirable for those Envestra shareholders who do not want to invest in a company with the characteristics of APA Group’’.
He wants more cash and says that the premium for control being offered by APA Group is insufficient.
Because APA, which owns 33 per cent of Envestra, cannot vote on the transaction, CKI’s stake is enough for it to block the deal, which requires 75 per cent of eligible share-votes.
The scheme meeting for the deal will be held in Adelaide on May 13.