The bidding war for energy infrastructure investor Hastings Diversified Utilities Fund (HDF) has intensified, with predator APA Group again lifting its takeover offer.
The move by APA comes just days after rival suitor Pipeline Partners Australia (PPA) increased its cash offer for HDF.
APA on Friday said it would increase its bid by 18 cents in cash, to 80 cents in cash and 0.39 APA securities for each HDF security if its offer reaches an acceptance level of 90 per cent and it becomes entitled to compulsorily acquire the rest of HDF.
But, it added, regardless of whether it were able to proceed to compulsory acquisition, it would still lift its offer by 10 cents, to 72 cents in cash and 0.39 APA securities for each HDF security.
“Based on yesterday’s closing price of $4.70 for APA securities, the implied value of the 90 per cent offer is $2.63 per HDF security, and the implied value of the minimum offer is $2.55 per HDF security,” APA said.
APA’s previous offer comprised 62 cents in cash and 0.39 APA securities, giving an implied offer value of $2.45.
On August 15, PPA had increased its offer for HDF to $2.43 per security from $2.325.
In May, PPA had proposed to pay $2.35 per HDF security less any distributions paid by HDF. A distribution of 2.5 cents per security was paid on August 6.
APA chairman Len Bleasel said the latest APA offer for HDF was clearly superior to the one from Pipeline Partners.
“We expect the independent directors (of the responsible entity for HDF, Hastings Funds Management Ltd) to seek the opinion of the independent expert on the comparative values of the APA offer and the PPA offer as soon as possible,” he said.
“As our offer contains APA securities, the long-term benefits derived from the integrated APA portfolio, which will include the majority of HDF’s assets, will accrue to all APA securityholders, including HDF investors who retain an investment in APA.”
Hastings Funds Management Ltd (HFML) said on Friday that it had reviewed APA’s revised offer and had subsequently advised PPA that APA’s revised offer was a superior bid to PPA’s all-cash offer of $2.43 per HDF security.
“The independent directors have not, at this time, changed or withdrawn their unanimous recommendation of Pipeline Partners Australia’s offer,” HFML said.
HFML said that under a takeover bid implementation deed between HDF and PPA, PPA has until midnight on Tuesday, August 21, to make an equivalent or superior bid to the revised APA offer.
HFML had earlier recommended that Hastings investors accept the PPA offer of $2.43 in the absence of a superior bid being put on the table.
HFML has said previously that PPA’s all-cash offer provides more certainty for investors, compared to APA’s cash-and-scrip bid.
Securities in HDF were five cents higher at $2.58 at 1501 AEST on Friday. APA was five cents lower at $4.65.
