Cheung Kong, the Hong Kong conglomerate owned by Asia’s richest man Li Ka-shing, is seeking to buy the 83% of natural gas distributor Envestra it does not already own, trumping a $2 billion bid by APA Group.
At the 10.15am (AEST) official market open on Friday, Envestra shares were 18.81% higher at $1.3425, against a benchmark index fall of 0.54%.
The new all-cash offer is worth $1.87bn and would value Envestra at about $2.37bn and lands just days before shareholders were due to vote on the APA bid.
Cheung Kong already holds 17.46% of Envestra’s outstanding shares.
Its offer at $1.32 per share is at the top of the range assessed by an independent expert for the APA bid. It is a 17% premium above the last price of Envestra before its shares were placed in a trading halt on the ASX.
Gas infrastructure business APA Group in March made a takeover offer that values APA at $2.2 billion.
A report by independent expert Grant Samuel had said APA's offer of 0.1919 APA securities per Envestra share was fair, reasonable and in the best interests of Envestra shareholders. Grant Samuel valued Envestra at between $1.11 and $1.32 per share, compared to what it said was a $1.15 to $1.25 value in APA's bid.
The Foreign Investment Review Board would have to approve any takeover by Cheung Kong.
“At this time, Envestra shareholders do not need to take any action in relation to the consortium proposal,” Envestra said in a statement.
Cheung Kong has previously made several infrastructure purchases in Australia, including SA Power Networks, an electricity distribution business in South Australia and CitiPower, a company that supplies electricity to Melbourne's central business district.
Goldman Sachs is advising Envestra together with lawyers Johnson Winter & Slattery.
(additional reporting by firstname.lastname@example.org)