News from AAP

Pipeline Partners makes a $1.23bn bid for HDF

Print This Post A A A

The takeover battle for energy infrastructure investor Hastings Diversified Utilities Fund (HDF) is intensifying, with Pipeline Partners Australia making a binding $1.23 billion takeover offer.

Hastings Funds Management Ltd (HFML), which is the responsible entity for HDF, said on Tuesday that Pipeline Partners’ proposal included a cash offer of $2.325 per HDF security.

HDF is also subject to a cash-and-scrip takeover offer from APA Group, which owns gas transmission and distribution assets.

APA and Pipeline are keen to get hold of HDF’s gas transmission and distribution assets.

The APA offer of $2.13, less adjustments to distributions paid from December 14, 2011, is scheduled to close on July 31, 2012.

But HFML has already recommended that investors reject APA’s offer.

Hastings said the binding offer from Pipeline Partners was consistent with an indicative, non-binding proposal announced in May, prior to the start of the due diligence period.

In May, Pipeline Partners proposed to pay $2.35 per HDF security less any distributions paid by HDF. A distribution of 2.5 cents per security is payable on August 6.

Pipeline Partners is a consortium which includes Caisse de depot et placement du Quebec (CDPQ) and the Hastings-managed Utilities Trust of Australia (UTA).

“The (HFML) subcommittee of independent directors is currently considering the terms of the proposal and intend to make a decision within a week as to its recommendation to HDF securityholders,” Hastings said in a statement.

The company added that during the six months to June 30, 2012, HDF had achieved above-average returns against key market indicators.

HDF’s market capitalisation has risen from $1.087 billion to $1.272 billion, which together with distributions paid to investors in the same period, had resulted in an increase in security holder value of $212 million.

HDF securities were steady at $2.38 at 1426 AEST on Tuesday, while APA’s shares were one cents higher at $4.95.

Morningstar analyst Adrian Atkins said the bid from Pipeline Partners had been expected.

He said the next key event in the Hastings takeover battle would be the findings of the Australian Competition and Consumer Commission (ACCC) in relation to the APA offer.

“If the ACCC doesn’t block APA then I think it (APA) will come back with a higher offer,” Mr Atkins said.

He said the fact that HDF’s current market price was above both bids indicated that investors believed higher offers may be forthcoming.