The responsible entity for takeover target Hastings Diversified Utilities Fund (HDF) has stuck by its recommendation that securityholders accept an offer from Pipeline Partners Australia (PPA).
Energy Infrastructure investor Hastings is subject to two takeover offers: an all-cash offer from PPA and a cash-and-scrip offer from APA Group.
Hastings Funds Management Ltd (HFML), the responsible entity for HDF, on Friday released Hasting’s target’s statement in response to the PPA offer.
HFML has already recommended that Hastings securityholders accept the PPA offer in the absence of a superior bid, but APA last month indicated that it may increase its bid subject to successful completion of satisfactory due diligence.
HFML chairman Alan Cameron said on Friday that HDF was working positively with APA and may provide APA with access to appropriate due diligence in due course.
But, at this point, there was no certainty that APA would make a formal revised offer for HDF.
“Your independent directors have carefully considered Pipeline Partners Australia’s offer and have concluded that it is presently the highest value choice available to all HDF securityholders, given the uncertainty of APA’s intention to increase its offer and the assessment of the merits of internalisation (of HDF management),” Mr Cameron said in an announcement accompanying the target’s statement.
PPA has made an all-cash offer of $2.325 per HDF security, which HFML said was in the valuation range for a control acquisition of $2.30 to $2.69 estimated by independent expert Grant Samuel & Associates.
HDF securityholders would also be entitled to receive HDF’s June quarter cash distribution of 2.5 cents per security without any reduction in PPA’s offer price.
The independent expert has concluded that the PPA offer is fair and reasonable in the absence of a superior proposal.
The HFML independent directors said that among the reasons for recommending the PPA bid was the fact that the PPA offer was for a cash price and it provided certainty for HDF securityholders.
Furthermore, the PPA offer was presently the highest value choice available to HDF securityholders.
APA’s original bid, made in December 2011, comprised 50 cents in cash and 0.326 APA securities for each HDF security, implying a value of $2.00 for each HDF security.
HFML said the implied value of the original APA offer at July 27 was $2.02 per HDF security.
APA Group said on July 25 that it intended to increase its offer to at least $2.50 per HDF security, comprising at least 60 cents in cash and a fixed amount of APA securities.
With the addition of a distribution from HDF of 2.5 cents per security due to be paid in early August, the offer represented a combined value of at least $2.525 per HDF security.
Securities in HDF were steady at $2.55 on Friday. APA was four cents lower at $4.86.
