CKI Holdings’ Bid for Australia’s Duet Group, Value Would Have to Come from Cheaper Debt
Given our fair value estimate for the Duet Group of AUD 2.10 per share and Cheung Kong Infrastructure Holdings’, or CKI's, takeover bid is at AUD 3.00, our preliminary view is that the value accretion to CKI would have to come primarily from lower debt costs. At this stage, CKI’s estimated cost of debt is 5.8%, 70 basis points lower than Duet’s. CKI may also be able to extract added returns through shareholder loans. Duet Group is studying the bid and it’s too early to rate the success of CKI’s ...CK Infrastructure Holdings and its subsidiaries are engaged in the development, investment and operation of infrastructure businesses in Hong Kong, Mainland China, the U.K., the Netherlands, Australia, New Zealand and Canada. Through its subsidiaries, Co. is engaged in investment holding; production and laying of asphalt; manufacturing, sale and distribution of cement and property investment; financing; treasury; and waste management servicce. Through its principal associates, Co. is engaged in investment in power and utility-related businesses, and electricity distribution.
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