CKI consortium’s $9.79bn APA Group acquisition deal falls through

The A$13bn ($9.79bn) proposed acquisition of Australian gas pipeline company APA Group by a Hong Kong-based consortium led by CK Infrastructure Holdings (CKI) has collapsed after the Australian Government rejected the transaction.

Australia Treasurer Josh Frydenberg vetoed the proposal and said that it would be contrary to the national interest.

Frydenberg said: “I have formed this view on the basis that it would result in a single foreign company group having sole ownership and control over Australia’s most significant gas transmission business.

“My decision is not an adverse reflection on CK Group or the individual companies. The Australian Government welcomes CK Group’s investments in Australia and its broader contribution to the Australian economy.”

Also comprising CK Asset Holdings (CKA) and Power Assets Holdings, the CKI consortium launched the acquisition bid in June.

APA Group has a network of 15,000km of natural gas pipelines, representing 56% of Australia’s gas pipeline transmission system, and serves 1.3 million Australian homes and businesses.

The formal rejection comes after Frydenberg made public his stance earlier this month that the transaction could be blocked on the grounds of national interest.

APA Group chairman Michael Fraser said: “With the CKI consortium proposal not proceeding, the way ahead for APA is very clear – we will continue to work on ‘APA’s Plan A’, which is the successful growth strategy that we have employed for almost two decades.”

Reconfirming its FY2019 guidance in the wake of the termination of the deal, APA stated that it expects to realise earnings before interest, tax and depreciation of between A$1.55bn ($1.12bn) and A$1.57bn ($1.13bn) over the period.