A bidding war has broken out for electricity network company AusNet, with ASX-listed energy infrastructure firm APA Group launching a $10 billion takeover offer for the utility business, just a day after Canadian-based asset managers Brookfield lobbed their own offer.
APA group already operates a $21 billion portfolio of mostly gas and also electricity assets, including the Murraylink electricity interconnector between New South Wales and Victoria and a large portion of Victoria’s gas distribution network.
Meanwhile, AusNet owns and operates the bulk of Victoria’s transmission network infrastructure, as well as a large proportion of the state’s electricity and gas distribution network. While listed on the ASX, AusNet remains majority-owned by an overseas consortium of Singapore Power and the State Grid Corporation of China.
APA Group said that together, AusNet and APA Group could “accelerate” the energy transition underway in Australia.
“The proposal would bring together two high-quality businesses and create a listed flagship Australian group with the scale and capability to accelerate the $20 billion growth in electricity transmission infrastructure needed to support the decarbonisation of Australia’s economy,” APA Group said in a statement.
APA Group has sought to diversify its business into greener energy offerings and already operates the Emu Downs and Badgingarra wind and solar projects in Western Australia, the Darling Downs solar farm in Queensland, and a stake in the North Brown Hill Wind Farm in South Australia.
The infrastructure firm is also a partner in a major green hydrogen proposal for Gladstone, being supported by the Queensland government, that could see renewable hydrogen made and exported from North Queensland.
APA managing director and CEO Rob Wheals said the opportunity to combine the two businesses would enhance the capabilities of Australia’s energy infrastructure sector, while ensuring the assets remained under predominantly Australian control and listed on the ASX.
“Unlike many OECD countries, Australia lacks a locally owned and controlled energy utility with capabilities across critical energy infrastructure and with the size and strength to partner with government and the community to deliver the energy transition,” Wheals said.
“The combination of APA and AusNet is a unique opportunity to deliver that vision and retain a proudly Australian controlled combined group listed on the ASX.”
APA’s offer comes just a day after AusNet revealed that it had received a $9.6 billion offer from Brookfield.
The group said that unlike the takeover offer from Brookfield, its own offer would not require clearance from the Foreign Investment Review Board.
APA’s largest shareholder is UniSuper, with significant stakes also held by Blackrock, Vanguard and State Street Corporation.
APA will offer AusNet shareholders $2.60 per share, above the $2.50 per share being offered by Brookfield.
AusNet and Brookfield are yet to respond to the APA offer formally, but the AusNet board has previously indicated that it would unanimously back the Brookfield offer, provided conditions were met.
APA Group said that it was disappointed that AusNet had sought to proceed with the Brookfield offer.
“APA canvassed AusNet’s major shareholders prior to approaching AusNet with the Original Proposal. APA understands that Singapore Power was supportive of APA and AusNet engaging in discussions to determine whether a transaction could be agreed. APA has also discussed the Original Proposal directly with State Grid,” APA said in a statement.
“APA is disappointed that AusNet has purported to enter into a period of exclusivity with Brookfield for effectively eight weeks, notwithstanding AusNet’s knowledge of the pending revised, and potentially superior proposal, from APA.”