Morningstar | ACCC Clears CKI's Bid for APA Group, but FIRB Remains the Major Hurdle
As we had anticipated, the Australian Competition and Consumer Commission, or ACCC, will not oppose the takeover of narrow-moat APA Group by Cheung Kong Infrastructure, or CKI. However, the bid's major hurdle still looms in the Foreign Investment Review Board. We do not expect that FIRB will approve the takeover and we retain our fair value estimate of AUD 8.30, which is based on the firm's value as a stand-alone business. Last trading at AUD 9.91, shares in APA remain overvalued.APA's gas transmission network is unparalleled, and CKI already owns stakes in gas and electricity networks in Victoria, South Australia, and Western Australia. If FIRB were to approve the takeover, CKI's influence on Australia's energy security would be substantial. We believe FIRB is likely to have reservations with the vast majority of Australia's gas transmission network falling under foreign control. The takeover price of AUD 11 is at a 33% premium to our fair value estimate. Shares currently trade at a 10% discount to the bid price, highlighting that the market also has its reservations on the likelihood of FIRB approval being granted.
APA Group's principal activities are the ownership and operation of energy infrastructure assets and businesses, including energy infrastructure, primarily gas transmission businesses located across Australia; asset management and operations services for the majority of Co.'s energy investments and for third parties; and energy investments in listed and unlisted entities. Co. comprises the following reportable segments: Energy Infrastructure, Asset Management, and Energy Investments.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.