TAKEOVER target Hastings Diversified yesterday launched a spirited rejection of the unwelcome takeover offer from rival APA, arguing it seriously undervalues units in the pipeline owner.
But Hastings did not provide unitholders with an independent valuation to back up its claim.
APA has launched a cash and scrip offer for Hastings Diversified, with unit holders to receive 0.326 APA shares and 50? cash for each unit held.
At the time the offer was launched, in mid-December, it placed a value of $2 on each Hastings unit, which was based on the APA share price at the time of $4.60.
APA shares closed yesterday at $4.54, down 7?, with Hastings Diversified units at $1.995, down 0.5?.
In its target statement released yesterday, Hastings said the offer undervalues the company, is highly opportunistic since it comes at a time when revenues are set to grow strongly, while also arguing that the offer is "highly conditional and uncertain".
The upgrading of part of its pipeline network in Queensland, has led to a $460 million long-term contract, believed to be with Santos, with other contracts likely to be finalised for further revenue growth.
Existing contracts indicate Hastings will enjoy annual compound growth averaging 15.5 per cent in the five years to fiscal 2015, the target said.
The bid fails to appropriately value the company's "significant contracted revenues of over $4 billion which will be earned over the next 23 years and [its] significant revenue growth in the short term and beyond," Hastings said.
But the lack of an independent valuation in the target statement was criticised by APA.
"We can only assume no independent expert's report has been provided because [Hastings] feared the report would confirm APA's offer was within the value range," APA managing director Mick McCormack said.
"The offer is far too low and not in the realms of being one we would entertain," Andrew Day, chief executive of Hastings Funds Management, said. "If it was, we would have brought in an outside valuation."
Hastings also claimed to have achieved a better return than APA, pointing to an assessment by Mercer that its unitholders had enjoyed a total return of 9.78 per cent annually since it went public, more than double the ASX 200 Industrials Accumulation Index return of 4.50 per cent over the same period and APA's 5.69 per cent return.
Hastings also said it was negotiating a refinancing and studying expansion opportunities that may improve operating cash flows "in the short to medium term".