PERTH (miningweekly.com) – Federal Treasurer Josh Frydenberg on Wednesday said that a A$13-billion takeover of infrastructure group APA Group by a consortium led by CK Infrastructure Holdings, was “contrary to the national interest”.
The Treasurer is expected to make a final decision on the A$11-a-share offer, which was launched in June, within two weeks.
Frydenberg said that his initial view of the transaction was formed on the grounds that it would result in an “undue concentration of foreign ownership” by a single company group in Australia’s most significant gas transmission business.
The transaction was approved by the Australian Competition and Consumer Commission (ACCC) in early September, and has been backed by the APA Group directors.
The assets tipped for divestment include the Parmelia gas pipeline, the Goldfields gas pipeline, the Kalgoorlie to Kambalda pipeline and the Mondarra gas storage facility.
Frydenberg said on Wednesday that his preliminary view had taken into account the significant analysis undertaken through a coordinated whole-of-government assessment and in close consultation with the Foreign Investment Review Board (FIRB) and the Critical Infrastructure Centre, which are key sources of advice to support government decision-making, including on investment transactions.
“The concentration of foreign ownership was not a question considered by the ACCC’s assessment of this proposed acquisition. The FIRB was unable to reach a unanimous recommendation, expressing its concerns about aggregation and the national interest implications of such a dominant foreign player in the gas and electricity sectors over the longer term,” the Treasurer said.
“The APA Group is a unique company, widely held amongst investors with significant Australian ownership and management. It is by far the largest gas transmission system owner in Australia, owning 15 000 km of pipelines representing 56% of Australia’s gas pipeline transmission system, including 74% of New South Wales and Victorian pipelines and 64% in the Northern Territory.
“It also supplies gas for part of all mainland capital cities’ consumption, gas-fired electricity generation assets and liquefied natural gas exports.”
Frydenberg said that his preliminary view was not an adverse reflection on CK Group or the individual companies, noting that the CK Group of companies was already a substantial investor in Australia’s gas and electricity sectors and a significant provider of infrastructure services.
“My preliminary view reflects the size and significance of APA Group. It is about the extent to which the proposal is consistent with Australia’s national interest.
“The application of our foreign investment policy, expressed through my preliminary view, is not discriminatory against any investor or country,” the Treasurer said.