Hastings rejects APA's 'opportunistic' offer

Q: How much contracted revenue did Hastings say it has over the long term?

Hastings stated the bid failed to value significant contracted revenues of over $4 billion which will be earned over the next 23 years, according to its target statement.

THE takeover target Hastings Diversified has launched a spirited rejection of the offer from its rival, APA, arguing that it undervalues the pipeline owner.

By InvestSMART · 21 Jan 2012

By InvestSMART ·
21 Jan 2012

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THE takeover target Hastings Diversified has launched a spirited rejection of the offer from its rival, APA, arguing that it undervalues the pipeline owner.

APA has launched a cash and scrip offer for Hastings, with unit holders to receive 0.326 APA shares and 50? cash for each unit held. When the offer was launched last month it valued Hastings at $2 per unit.

In its target statement yesterday, Hastings said the offer was opportunistic as it came at a time when revenues were set to grow strongly. It also argued the offer was "highly conditional and uncertain".

The upgrading of part of its pipeline network in Queensland has led to a new $460 million long-term contract, believed to be with Santos. Other contracts are likely to be finalised to provide further growth.

Existing contracts indicate Hastings will enjoy annual compound growth averaging 15.5 per cent in the five years to 2015, the target said.

The bid failed to value "significant contracted revenues of over $4 billion which will be earned over the next 23 years and significant revenue growth in the short term and beyond", Hastings said.

APA hit back, criticising the lack of an independent valuation of Hastings in the company's target statement.

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Frequently Asked Questions about this Article…

What exactly did APA offer Hastings Diversified in its takeover bid?

APA launched a cash-and-scrip offer giving Hastings unit holders 0.326 APA shares plus a cash component per unit (noted in the article as "50? cash"), an offer which was valued at $2 per Hastings unit when it was launched.

Why did Hastings Diversified reject APA’s offer as undervaluing the company?

Hastings said the APA offer was opportunistic and undervalued the pipeline owner because it came at a time when Hastings’ revenues were set to grow strongly, and the company described the bid as "highly conditional and uncertain."

What growth evidence did Hastings cite to support its rejection of the bid?

Hastings pointed to a Queensland pipeline upgrade that led to a new $460 million long‑term contract (believed to be with Santos), the likelihood of other contracts being finalised, and existing contracts that imply strong near‑term and long‑term revenue growth.

How much contracted revenue did Hastings say it has over the long term?

Hastings stated the bid failed to value "significant contracted revenues of over $4 billion which will be earned over the next 23 years," according to its target statement.

Which specific new contract did Hastings highlight after the Queensland pipeline upgrade?

Hastings highlighted a new $460 million long‑term contract that resulted from the Queensland pipeline upgrade, which the article says is believed to be with Santos.

What historical growth rate did Hastings reference in its target statement?

Hastings said existing contracts indicate it will enjoy annual compound growth averaging 15.5% in the five years to 2015.

How did APA respond to Hastings’ criticisms of the offer?

APA hit back at Hastings by criticising the lack of an independent valuation of Hastings in the company’s target statement.

What valuation per unit did APA’s offer imply when it was launched?

When APA launched the offer last month it valued Hastings at $2 per unit.