Energy Crisis hits Front Page Agenda, page-5

Li Ka-Shing’s CKI bids $7.5bn for listed power firm Duet Group


Li Ka-Shing’s Cheung Kong Infrastructure has launched a bid for Duet. Picture: Bloomberg

• The Australian
• 8:47AM December 5, 2016
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• BRIDGET CARTER
  
  Mergers & Acquisitions Editor
  Sydney
  @BridgetCarterb
  

Cheung Kong Infrastructure has launched a $7.5 billion cash bid for the listed Duet Group.
It comes only months after the federal government blocked attempts by the company controlled by Hong Kong billionaire Li Ka-Shing to buy the NSW government’s electricity distribution company Ausgrid due to national security concerns.
The $3 per share Duet offer was lobbed in recent days and emerged at the weekend.
Duet this morning said the boards of the Duet group were evaluating the proposal and securityholders were advised to take no action, as there was no certainty it would proceed further.
The offer represents a 27 per cent premium to Duet’s closing share price on Friday of $2.35.
Duet invests in energy utility assets and a bid by CKI is seen as a strategic move by the company, which already controls key power assets in Australia and would enable it to establish a greater stronghold in the West Australian and Victorian power markets.
Analysts yesterday were questioning whether the listed APA Group might lob a rival offer for Duet after flagging its intention to embark on further acquisitions, although sources close to the company denied a move was under consideration.
One analyst described the move on Duet as “throwing down the gauntlet” to the Foreign Investment Review Board, given Duet owns United Energy, which serves some of the wealthiest suburbs in Melbourne.
CKI is thought to covet Duet’s strategic Dampier-to-Bunbury pipeline, which delivers almost all of Perth’s gas, and its Multinet business, which distributes gas in Melbourne. Analysts suggested CKI could also turn its sights on Spark Infrastructure if its move on Duet proves unsuccessful. Spark sold its stake in Duet in the past year.
Duet’s share price touched a 12-month high in August of $2.72 and has rallied from a $2.15 low last month to close at $2.35 on Friday. It counts Unisuper as a major shareholder with a 16 per cent stake. CKI is being advised by Morgan Stanley while Macquarie Capital is working as defence adviser for Duet.
CKI is known to have had an interest in the NSW government’s Endeavour Energy business, though any potential deal could also fall foul of the FIRB.

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