Regulator clears APA's bid for Hastings
THE takeover tussle for the pipeline owner Hastings Diversified has intensified, with the competition regulator deciding not to oppose APA Group's bid for the company.
THE takeover tussle for the pipeline owner Hastings Diversified has intensified, with the competition regulator deciding not to oppose APA Group's bid for the company.The decision paves the way for APA to revise its offer for Hastings Diversified, which will probably narrow the gap between its present offer and the rival bid that has emerged from local and Canadian investors.Following the decision by the Australian Competition and Consumer Commission, APA said it was considering its options with regard to its offer for Hastings Diversified.APA's offer, which was launched late last year, has been subject to lengthy scrutiny by the ACCC, which has been concerned about a possible lessening of competition if the takeover succeeds.Hastings Diversified controls pipelines from the Cooper Basin in central Australia to Queensland and South Australia, while APA controls pipelines from Moomba to Sydney as well as into Brisbane, and from Victoria to Adelaide.Control of Hastings Diversified will give APA a dominant position in gas transportation into eastern Australia. The company also owns pipelines in Western Australia and the Northern Territory.To allay the regulator's concerns, APA said it would sell the Moomba-Adelaide pipeline if its bid succeeded, as well as ensure that other pipeline connections could be made to its Queensland assets in future.The ACCC accepted the first undertaking but did not see the need for the latter, partly because of the "countervailing power of the major gas producers" in the gas market, the ACCC chairman, Rod Sims, said.The regulator said it was not convinced the acquisition would result in higher prices for shipping gas or make it more difficult to develop competing pipelines, although it was concerned with supplies to Adelaide."The ACCC had significant concerns that, absent the undertaking [to sell the Moomba-Adelaide pipeline], APA would own all of the pipelines servicing Moomba and have a significant interest in both of the pipelines servicing Adelaide and that this would substantially lessen competition in the supply of gas transmission pipeline services and ancillary services," Mr Sims said.Selling the Adelaide pipeline "addresses these primary competition concerns by ensuring that there is a separate owner of gas pipelines servicing Adelaide and Moomba", he said.The flurry of export gas projects being developed in Queensland has increased the value of the Queensland pipeline owned by Hastings, since it links up with APA's pipeline that supplies to Brisbane.APA is offering 0.326 of its shares plus 50? in cash for each Hastings share held, less any dividends paid by the target company during the offer.APA already has a 20 per cent holding in Hastings.Another bid has made by Pipeline Partners Australia, a consortium of local and Canadian investors. It is offering $2.325 in cash. It has an 8 per cent stake in Hastings.