THE TAKEOVER battle for Envestra is over, with suitor APA Group conceding defeat and announcing it would sell its stake in the company to rival bidder the Cheung Kong Group consortium.
Envestra, which owns about 23,000 kilometres of natural gas distribution networks and 1,100 kilometres of transmission pipelined across Australia, had signed a scheme of arrangement proposal with APA Group in late 2013.
That scheme would have seen Envestra shareholders offered either just over 0.19 new APA shares for each share held – or a cash payment of $1.173 per share.
Cheung Kong Group, which had two representatives on the Envestra board, opposed the deal, making a rival offer in May of $1.32 per share.
APA managing director Mick McCormack said in August that it would make about A$784 million in gross proceeds and would realise an estimated pre-tax profit of A$430 million on the sale.
“The cash offer put forward by the consortium well exceeded our valuation of the Envestra business, even at full ownership,” he said.
“While our rationale for owning the Envestra business remains sound, APA assessed the value proposition of the offer and concluded that selling out of this investment and redeploying the proceeds in other opportunities will provide better longer term value for APA securityholders.”
APA will use the consideration received to fund ongoing growth and investment projects over the coming 12 to 18 months.
The company had also received A$21 million in July, following the allocation of a dividend of 3.5 cents per share by Envestra – the payment of which was disputed by Cheung Kong Group.
APA retains its Operations and Management Agreement on the Envestra assets, which runs to 2027, it said.
The news came as Envestra announced a full year profit of $153 million for the 2013-2014 financial year, an increase of 42 per cent over the previous year.
The increase was due to higher revenues driven by annual tariff adjustments across the company’s gas networks, with Envestra adding it expected profitability would be broadly the same in 2014-2015.