Keeping an eye on Communist, Totalitarian China, and its influence both globally, and we as Canadians. I have come to the opinion that we are rarely privy to truth regarding the real goal, the agenda of Red China, and it's implications for Canada [and North America as a whole]. No more can we rely on our media as more and more information on China is actively being swept under the carpet - not for consumption.
Monday, April 24, 2017
FIRB approves Li Ka-Shing's Cheung Kong/DUET acquisition
Hong Kong infrastructure giant Cheung Kong Group has shrugged off last year's embarrassment of being blocked as a bidder for NSW power distributor Ausgrid and won approval for its $7.4 billion takeover of DUET Group, shifting another suite of Australian energy assets into Chinese hands.
In a move presumably timed to coincide with the approval, the Hong Kong group announced the addition of an Australian director to the parent company board. Former career diplomat Paul Tighe was Australian consul-general to Hong Kong until 2016 and has held no board positions in the past three years.
The shock Ausgrid ruling, where Cheung Kong's infrastructure arm was barred from bidding alongside rival China's State Grid Corporation on national security grounds, had from the start cast doubt on whether the global player would get clearance to buy DUET. The Sydney-based firm owns similar poles and wires assets in Victoria as well as Western Australia's biggest gas trunkline.
The prolonged deliberations, with a final decision coming five months after Cheung Kong applied to the Foreign Investment Review Board, added to the uncertainty, as did the setting up of the Critical Infrastructure Centre.
But ASX-listed DUET said on Friday it had been notified by the bidder that the Treasurer has "no objection" to the deal, which has been waved through without any conditions that Cheung Kong deemed unacceptable.
The conditions remain unclear, although they are thought to be typical requirements around local board representation and retaining headquarters within Australia. Mr Morrison's office wouldn't comment other than confirming the green light for the deal.
The deal price – representing a multiple between the enterprise value and regulated asset base of about 1.7 times – was welcomed by several investors. RBC Capital Markets analyst Paul Johnson described it as "very much at the high end of M&A valuations in the sector".
KPMG Corporate Finance, which was hired by DUET's board to assess the $3.03 per share offer, valued the stock at $2.32-$2.77.
Duet stock closed at $3.01 on Friday.
Still, the bidding consortium, comprising three Cheung Kong companies, "believes that DUET's energy utility assets present an attractive investment opportunity with good growth potential", the group said in January.
"Providing a steady income on a long-term basis through its regulated and contracted revenue, DUET offers a long track record of stable performance."
DUET also owns unregulated assets including a pipeline development company in Western Australia and 100 per cent of clean power producer Energy Developments Ltd, which it bought in 2015 for $1.7 billion.
DUET chairman Doug Halley said the company was "pleased" the decision had cleared the way for the takeover.
RBC's Mr Johnston said the FIRB approval of the deal could result in near-term gains for energy infrastructure stocks such as Spark Infrastructure and Ausnet, "as inevitably this may pave the way for these companies to be taken-over in time given their existing ownership structures".
He said that Spark, given Cheung Kong Infrastructure's 51 per cent ownership of Victorian Power Networks and SA Power Networks, is "the most likely take-out candidate over time".