APA throws hat in the ring with bid for AusNet, beats Brookfield's proposal by $382m

APA throws hat in the ring with bid for AusNet, beats Brookfield's proposal by $382m

The race to take control of Melbourne-based AusNet Services (ASX: AST) has been electified today after energy infrastructure business APA Group (ASX: APA) put forward a $9.96 billion bid for the Victorian grid operator, which currently counts Singapore Power and State Grid as its leading investors.

The news prompted AusNet to call a trading halt, and represents a $383 million lift on yesterday's proposal from Canada-based Brookfield Asset Management, which has made a name for itself in Australia in recent years with the acquisition of aged care provider Aveo.

APA's $2.60 per share offer is 10 cents higher than Brookfield's, and the suitor claims its bid is also superior as a deal would retain an ASX listing, create synergy benefits, and there would be no Foreign Investment Review Board (FIRB) considerations.

APA has revealed that it previously approached AusNet with a confidential non-binding scheme at $2.32 per share on 1 September, after which discussions took place and APA canvassed AusNet's major shareholders.

The suitor claims it understands Singapore Power was supportive of discussions between APA and AusNet to determine whether a transaction could be agreed upon, while APA has also discussed the proposal directly with State Grid.

It is against this backdrop that APA has expressed its disappointment that AusNet has purported to enter into a period of exclusivity with Brookfield for "effectively eight weeks, notwithstanding AusNet’s knowledge of the pending revised, and potentially superior proposal, from APA".

If APA Group and AusNet were to combine they would have total assets worth $29 billion, and APA believes this deal would accelerate the $20 billion growth in electricity transmission infrastructure needed to support the decarbonisation of Australia’s economy.

"Unlike many OECD countries, Australia lacks a locally owned and controlled energy utility with capabilities across critical energy infrastructure and with the size and strength to partner with government and the community to deliver the energy transition," says APA managing director and CEO Rob Wheals.

"The combination of APA and AusNet is a unique opportunity to deliver that vision and retain a proudly Australian controlled combined group listed on the ASX."

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