APA Group (ASX:APA) extends AusNet (ASX:AST) acquisition proposal

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Highlights

  • APA group extends its 100% acquisition proposal to AusNet Services Ltd (ASX:AST).
  • ASX:APA shares regain momentum on ASX.
  • The acquisition would create a flagship Australian company for electricity distribution.

Energy Infrastructure company APA Group (ASX:APA) has extended its superior proposal submitted to AusNet Services Ltd (ASX:AST). APA had submitted an AU$10 billion takeover bid to AusNet, which is considered superior to the Brookfield Scheme. On the extension of the proposal, APA group shares have regained pace on ASX, opening in the green today.    

Proposal Details-

  • APA sent a proposal to acquire 100% of AST shares for AU$2.60 per share under a scheme of arrangement.
  • On proposal confirmation, all AST shareholders are to get AU$1.820 cash and 0.0878 worth of APA shares for each AST share.
  • The total cash consideration shall be funded via a combination of existing cash and debt facilities with APA, along with bridge loans and new equity raising.
  • The probable new equity raising shall be around AU$1.5 billion to eligible existing shareholders on a pro-rata basis or an Entitlement offer.
  • APA shall, however, maintain its target credit rating of BBB/Baa2

What does it bring for APA?

  • The proposal accelerates APA’s pace towards becoming Australia’s flagship energy infrastructure business.
  • The combination will deliver connections critical for the rapid growth in the renewable energy segment.
  • The current valuation of the combined organic growth pipeline is AU$5 billion, bringing long term market opportunities of AU$68 billion to APA.
  • The deal shall provide immediate value for investors by being free cash flow accretive on a per security basis, that too, over a long-term post-acquisition.
  • The combined entity shall remain uniquely positioned to provide infrastructure solutions essential for Australia’s energy transition.

The proposal was due confirmation from AusNet, by Tuesday, for due diligence access to APA. However, APA has now extended its proposal for so long as the panel application remains under review.

APA shares are trading at AU$8.600 per share while AST shares are at AU$2.545 per share at 12 PM AEST.

Bottom line

While APA continues to consider the strategic rationale for the acquisition, it has received positive feedback from APA and AusNet shareholders. The ‘Superior proposal’ for combination shall work well for all stakeholders, even for Australia’s renewable energy transition.


 


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