SYDNEY (Reuters) - Australian gas pipeline owner Hastings Diversified Utilities Fund HDF.AX received a $1.25 billion takeover offer from a consortium including a Canadian fund manager On Tuesday, setting up a bidding war against APA Group (APA.AX).
Hastings shares jumped 14 percent to A$2.41 on the prospect that APA Group, which already owns 20.7 percent of Hastings, will want to come back with a higher offer.
At stake are the two main gas pipelines serving Australia’s main onshore gas hub, Moomba, with strong growth prospects from new coal seam gas projects and huge liquefied natural gas export projects at Gladstone in Queensland.
APA has a hostile $1 billion bid on the table, which has been held up by Australia’s competition watchdog. The offer is due to close on May 31.
The new offer of A$2.35 per share, or A$1.246 billion, came from Pipeline Partners Australia, a consortium including fund manager Caisse de depot et placement du Quebec (CDPQ) and Utilities Trust of Australia, a fund managed by HDF’s manager Hastings Funds Management.
That trumped APA’s offer of A$0.50 cash and 0.326 APA shares for each Hastings share, worth A$2.12 a share based on APA’s share price on Tuesday. HDF rejected the offer last December.
Hastings has struggled to lure a higher bid as APA had a blocking stake.
Pipeline Partners’ bid is conditional on receiving at least 70 percent support.
The consortium has been granted due diligence for a period of up to 45 days.
HDF sought to reassure shareholders that the consortium was independent from it, saying all the Hastings units were being advised separately.
“Hastings continues to apply rigorous corporate governance procedures and has put in place appropriate information barriers to protect the interests of all HDF securityholders,” Hastings Fund Management chairman Alan Cameron said in a statement.
($1 = 1.0020 Australian dollars)
Reporting by Amy Pyett; Editing by Eric Meijer