Ann: AusNet Services Limited 02 - Panel Receives Application, page-6

https://amp.theaustralian.com.au/business/dataroom/ausnet-shareholders-getting-nervous-over-takeovers-panel-move/news-story/31b0ca9c56e4388c1c583e9a4aa39069

AusNet shareholders getting nervous over Takeovers Panel move

By BRIDGET CARTER

9:53PM OCTOBER 5, 2021

AusNet shareholders are getting anxious about the $10bn battle playing out between Brookfield and APA Group for the Australian electricity asset owner.

The fact that the fight for the company is now before the Takeovers Panel creates risks for the deal, and the concern among AusNet shareholders is that a firm bid from one party is looking less certain.

A number of AusNet shareholders are sellers and want certainty that a bid will proceed.

Major shareholder Singapore Power, which holds 32.3 per cent of the company, is expected to be a seller.

The intentions of China’s StateGrid, which owns 19.9 per cent, remain unclear.

DataRoom understands that one of the reasons that the AusNet board opted to move forward with a Brookfield bid was that AusNet shareholders were not enthusiastic about the prospect of being paid in APA scrip.

APA has been scouring the US landscape for acquisitions as part of its quest to move away from gas and many shareholders believe more capital raisings could be on the cards in the future.

It remains under pressure to embark on a transformational acquisition.

DataRoom understands it had earlier been weighing an acquisition of the other listed electricity asset owner, Spark Infrastructure, which is now being purchased by a consortium led by the Ontario Teachers’ Pension Plan Board.

Hedge funds have been short-selling the APA stock on the back of a potential equity raising linked to the transaction.

Brookfield was granted eight weeks of exclusive due diligence last month to buy AusNet at $2.50 a share.

Only a day after its proposal had been announced, APA announced it had earlier approached the board with a proposal of $2.32 per share.

It told AusNet on September 16 that it would be prepared to lift its initial bid.

It wanted to put forward a cash and scrip proposal that valued the company at $2.60 at the time of its announcement.

APA has taken the matter to the Takeovers Panel because it cannot carry out due diligence at the same time as Brookfield.

The concern for APA is that Brookfield will put forward a binding offer immediately after due diligence and an agreement will be made with the company to buy the business.

Its hope rests on Brookfield walking away from the target after carrying out due diligence or a rejection from the Foreign Investment Review Board.

But APA equally has regulatory concerns.

The Australian Competition & Consumer Commission is likely to take exception to its approach.

Brookfield has made its own application to the panel, accusing APA on Monday of making announcements that contain misleading and incorrect information, in relation to its claim that its offer was superior when it was subject to the movement of its volatile share price.

AusNet owns the Victorian electricity transmission network along with gas and power distribution assets.

It is open to talks with APA once Brookfield’s period of due diligence ends.

APA said that its offer – which is split between $1.82 a share in cash and .0878 APA shares for each AusNet share – would remain on the table until the Takeover Panel makes a decision, even though the bid was set to expire on September 28.