Competition watchdog ACCC shows a green card to APA takeover bid by CKI

APA Group

The competition watchdog ACCC has today approved Hong Kong-based CKI Consortium’s $13 billion acquisition offer for gas pipeline company APA.

In the announcement to ASX today, APA Group (ASX:APA) said that Australian Competition and Consumer Commission (ACCC) will not oppose the previously announced takeover bid under which CKM Australia Bidco Pty Ltd has proposed to acquire all the stapled security in APA for $12.98 billion in all cash transaction. 

Last month on 13 August 2018, APA and CKI consortium entered into an implementation agreement, pending regulatory approvals. Under that agreement APA’s Board of Directors unanimously approved CKI’s offer to acquire all stapled security in APA at 30% premium to $11.00 cash per security.

One month later to this agreement, today Australia’s competition regulator ACCC stated that vertical integration of CKI Consortium’s gas distribution assets and APA’s transmission assets would not harm competition.

This comes after ACCC has accepted a court-enforceable undertaking given by CK Consortium to divest significant gas assets in Western Australia as the competition watchdog was concerned that in the absence of undertaking the CKI Consortium would own most gas transmission and storage facilities in the west.

As per that undertaking CKI led consortium must sell the Goldfields Gas Pipeline, the Kalgoorlie to Kambalda Pipeline, Parmelia Gas Pipeline, and the Mondarra gas storage facility. However, certain regulatory and APA Securityholders approvals remain pending for completion of the scheme.

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Following ACCC approval announcement, APA’s stock surged 1.228% to $9.989 on 12 September 2018 (1:01 PM AEST). The stock has recorded a performance change of +13.12% over the past one year.

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