Hong Kong's CKI offers $5.4 billion in bid for Australian energy firm

Company - Himanshu Gill - Dec 05,2016

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hong kongs cki offers 5 billion dollar in bid for australian energy firm

Hong Kong’s Cheung Kong Infrastructure (CKI) Holdings Ltd. has made an unsolicited offer to acquire Australian energy firm Duet Group for a whopping $5.4billion.

CKI is owned by billionaire Li Ka-shing, who has offered a premium which is about 28 percent of Duet’s share price to gain control over its pipeline assets. Ka-shing had made a conditional offer of Australian $3 per share for Duet last week, and had asked not to be identified as the details were private. The board of Duet has said that they have plans to consider the offer which stands at Australian $7.3 billion.

The bid would be subject to an approval from Australia’s Foreign Investment Board Review (FIRB) before getting finalized as a deal. Earlier this year, the Australian government had rejected a $7.4 billion bid from CKI and China’s State Grid Corp combined for getting a controlling stake in the state-owned energy grid, Ausgrid, on the grounds of security.

CKI already has controls over power grids in South Australia and Victoria where Duet owns other assets as well as a nationwide gas distributor. In 2015, the Hong Kong based giant was also cleared by FIRB to buy another state owned electricity grid, TransGrid, although that asset later went to a different buyer.

Expanding his business in Australia would also help Ka-shing to diversify away from the U.K., which is at present the biggest profit generator for his company as Britain’s decision to split off from the European Union threatens to undermine the economy. CKI, being a global infrastructure company also has investments and operations in Netherlands, Portugal, New Zealand and Canada. Li Ka-shing’s wealth from his worldwide business operations is estimated at $33. 5 billion, according to Forbes magazine.

Meanwhile, Duet has advised its shareholders to take no action as the proposal is still uncertain.