Speculators jump into Hastings

Hastings Diversified is the focus of a takeover battle after APA Group launched a cash-and-scrip offer valuing the pipeline owner at about $2.10 late last year. That offer has been eclipsed by a higher cash bid from Pipeline Partners Australia, and heightened takeover speculation has driven heavy trading in Hastings shares.

The two main bidders are APA Group, which made a cash-and-scrip offer, and Pipeline Partners Australia, a consortium of Canadian and local investors that put forward a higher cash bid. Analysts and speculators have been watching both offers closely.

The Australian Competition and Consumer Commission (ACCC) allowed APA Group’s bid to proceed on the condition that APA disposes of the Moomba–Adelaide pipeline. Analysts have valued that pipeline at roughly $400 million, with UBS suggesting it could be worth up to $550 million.

Hastings shares jumped on heavy trading, reaching an intraday high of $2.525 and closing at $2.485, up about 13.5%, with more than 34 million shares traded—equivalent to over 6% of the company’s capital—reflecting strong investor interest amid takeover speculation.

APA shares were marked down on concerns it might overpay for Hastings and that future cash flows and dividends could be affected. The stock fell about 12% and closed at $4.96 on the day the takeover activity intensified.

Yes. Analysts at UBS and Citi suggested APA could raise its offer to around $2.50 a share and still make the deal work. Citi specifically noted APA could increase the cash component by another 40 cents per share—implying a value just over $2.50 assuming the existing scrip ratio and an APA share price of $5. Deutsche estimated APA might be able to pay up to about $2.60 based on the revenue outlook.

Deutsche commented that Pipeline Partners Australia could “easily pay about $2.45 for Hastings Diversified,” reflecting analyst views that the consortium has capacity to raise its bid in a competitive takeover situation.

Investors should watch for any formal increase in APA’s offer (the article says APA is expected to raise its offer next week in return for access to Hastings’ books), further moves from Pipeline Partners Australia, any conditions tied to the ACCC approval—such as disposal of the Moomba–Adelaide pipeline—and continued share-price volatility and trading volumes as the bidding contest develops.