Envestra Ltd managing director Ian Little has criticised APA Group's $2 billion takeover bid for the gas distribution business, arguing it does not offer good value for Envestra shareholders, according to The Australian Financial Review.
APA is already Envestra's largest shareholder, holding a 33% stake. It announced on Tuesday an all-share, non-binding merger offer to Envestra's board.
Under the offer, Envestra shareholders would receive 0.1678 new APA stapled shares for each Envestra share, plus any final Envestra dividend up to three cents per share for the 2013 financial year.
However, Mr Little has questioned APA's capacity to refinance Envestra's debt, arguing APA's offer lacked a premium.
“It's [the offer] conditional and we await the details but on the face of it it's hard to see where the benefits lie for Envestra shareholders,” Mr Little told the AFR.
APA argued its bid had an implied value of $1.10 per share, representing a 10.6% premium on Envestra's recent share value.
“On the face of it it's a pretty marginal proposition despite the comment that it's a 10% premium. It's more like a 1% premium,” Mr Little told the AFR.
“I think the combination of the assets would be quite sensible and there's potential benefits but we own the assets and the shareholders are entitled to a premium.”