The takeover tussle for control of pipeline owner Hastings Diversified has turned up another notch.
THE takeover tussle for control of pipeline owner Hastings Diversified has turned up another notch with the decision by the competition watchdog, the ACCC, not to oppose a bid by APA Group for the company.
The decision paves the way for APA to revise its bid for Hastings Diversified, which will likely close part of the gap between APA's present offer with that of the rival bid that has emerged from local and Canadian investors.
Following the Australian Competition and Consumer Commission's decision, APA said it was now considering its options with regards 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 bid succeeds.
Hastings Diversified controls key pipelines from the Cooper Basin in central Australia to Queensland and South Australia.
APA controls key 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. It also owns pipelines in Western Australia and the Northern Territory.
To allay the ACCC's concerns, APA undertook to sell the Moomba-Adelaide pipeline if its bid succeeds, as well as ensuring other pipeline connections could be made to its Queensland assets in the future.
The ACCC accepted the first undertaking, but did not see the need for the latter, due in part to the ''countervailing power of the major gas producers'' in the gas market, the ACCC chairman, Rod Sims said.
The ACCC 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 about 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 there is a separate owner of gas pipelines servicing Adelaide and Moomba'', he said. The boom in export gas projects being developed in Queensland has boosted the value of the Queensland pipeline owned by Hastings, since it links up with APA's pipeline, which supplies Brisbane.
APA is offering 0.326 APA shares plus 50? in cash for each Hastings share held, less any dividends paid by the target during the bid. APA already has a 20 per cent holding.
Another bid has been outlined by Pipeline Partners Australia, which is a consortium of local and Canadian investors. It is offering $2.325 in cash. It has an 8 per cent stake in the target.
Frequently Asked Questions about this Article…
What was the ACCC decision on APA Group’s takeover bid for Hastings Diversified?
The Australian Competition and Consumer Commission (ACCC) decided not to oppose APA Group’s bid for Hastings Diversified after APA offered undertakings to address competition concerns. That decision clears a regulatory hurdle and paves the way for APA to reconsider and possibly revise its offer.
Who are the bidders competing to buy Hastings Diversified and what offers have been mentioned?
Two bidders are highlighted: APA Group, which has launched an offer that includes 0.326 APA shares plus a cash component for each Hastings share (less any dividends paid during the bid) and already holds about 20% of Hastings; and Pipeline Partners Australia, a consortium of local and Canadian investors, which is offering $2.325 in cash and holds about an 8% stake.
How would an APA acquisition change the gas pipeline landscape in eastern Australia?
If APA acquires Hastings Diversified, it would gain control of key pipelines that Hastings owns—from the Cooper Basin to Queensland and South Australia—adding to APA’s existing network (Moomba–Sydney, links into Brisbane, Victoria–Adelaide and other assets). The article says this would give APA a dominant position in gas transportation into eastern Australia.
What steps did APA take to address the ACCC’s competition concerns?
To address the ACCC’s concerns, APA committed to sell the Moomba–Adelaide pipeline if its bid succeeds. The ACCC accepted that undertaking and did not require another proposed measure related to future pipeline connections, partly because of the countervailing power of major gas producers.
Did the ACCC think the takeover would raise gas shipping prices or block new pipeline development?
The ACCC said it was not convinced the acquisition would lead to higher prices for shipping gas or make it harder to develop competing pipelines. However, the regulator remained concerned about potential impacts on gas supplies to Adelaide, which was a key reason it required the sale of the Moomba–Adelaide pipeline.
What are the strategic reasons Hastings’ Queensland pipeline has increased in value?
The article notes a boost in value for Hastings’ Queensland pipeline because of a boom in export gas projects being developed in Queensland. That pipeline links to APA’s network that supplies Brisbane, making it more strategically important.
What does the ACCC’s non‑opposition mean for investors in Hastings and APA?
ACCC non‑opposition removes a major regulatory obstacle and increases the likelihood APA may revise its offer — potentially closing the gap with the rival cash bid. For Hastings shareholders, this could mean a higher chance of a successful takeover and possible changes in the offer price or structure; for APA investors, it signals a possible expansion of APA’s market position in eastern Australia.
What are the next steps after the ACCC cleared the way for APA to revise its bid?
Following the ACCC decision, APA said it was considering its options regarding the Hastings offer. That suggests APA may revise its bid to be more competitive against the Pipeline Partners Australia cash offer; the takeover tussle is likely to continue while bidders and Hastings shareholders assess revised proposals.
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