SPECULATORS took the opportunity of a lift in APA Group's takeover offer for rival pipeline owner Hastings Diversified to push the target company's share price ahead, signalling expectations of another increase in the offer emerging.
APA yesterday said it would lift its bid to $2.50 a share from its original offer of around $2. Including the 2.5? a share dividend to be paid by Hastings next month. This gives the revised offer an effective price of $2.525 a share.
But speculators lost little time pushing Hastings further ahead, to close at $2.54 in continued active trading, with more than 25 million shares changing hands. Hastings shares touched a high of $2.55. APA shares slipped 4? to $4.95.
APA has a 20 per cent holding in Hastings, and rival bidder Pipeline Partners Australia, which is a consortium of local and Canadian investors, holds 8 per cent.
The Australian Competition and Consumer Commission last week approved APA's bid subject to the sale of Hastings's Moomba to Adelaide pipeline if APA wins control. This asset has been valued at more than $400 million by analysts.
Pipeline Partners has a cash offer of $2.325 on the table, whereas APA's higher offer is a mixture of APA shares and 60? in cash per share.
After signalling it would raise its offer price, APA is seeking access to Hastings's books, so it can investigate the target company's finances.
"APA's revised proposal is clearly superior to the PPA offer," APA's chief executive Mick McCormack said. "To formalise the revised offer, APA seeks a short period of due diligence. We anticipate that our work will be able to be completed in around a week."
Hastings is yet to respond to the revised offer or APA's request for access to its books.
Standard and Poor's said its BBB rating of APA's finance unit was not affected immediately by the revised bid, although it flagged a series of points of interest, such as changes to the risk profile and the impact of the likely addition of around $1.3 billion of debt if the bid succeeds.
A spokesman for the Pipeline Partnership consortium said last night that APA had yet to clarify how many of its shares would be offered to Hastings shareholders under its revised offer.
"In addition, the uncertainty associated with the execution of the court-enforceable sale of [the Moonie-Adelaide pipeline] is a material value risk to both [Hastings] and APA security holders," the spokesman said.