APA Group (ASX: APA) shares jumped 20% today after the company announced it was the target of a takeover offer. A near-$13 billion takeover, no less.

The would-be acquirers are a consortium of companies, led by Hong Kong-based CK Infrastructure Holdings Limited. CK is Hong Kong-listed. The company was founded by Chinese-born billionaire Ka-Shing Li — Hong Kong’s richest family.

CK has made a number of acquisitions in recent times, including in the UK and Europe.

APA Group Takeover

CK’s proposed deal values APA at almost $13 billion or 15 times its earnings before interest, taxes, depreciation and amortisation (EBITDA).

APA Group’s website says, “We operate and maintain networks connecting 1.3 million Australian homes and businesses to the benefits of natural gas… All up, we own and/or manage and operate a portfolio of assets in excess $20 billion and deliver half the nation’s natural gas usage.”

For those reasons, I think it must be questioned if a foreign company should control such a vital asset in Australia. As noted on Strawman.com, CK was vetoed from the $11 billion takeover of Ausgrid, an Australian electricity distribution business with 1.7 million customers.

Treasurer Scott Morrison said at the time that the deal, “would be contrary to the national interest.”

But while the ACCC and Foreign Investment Review Board will no doubt be scrutinising the deal, it must also be noted that CK has made successful deals in Australia with DUET Group and Envestra, among others.

CK has already moved to allay some concerns with the APA deal. Yet as someone far wiser than I once said, ‘promises are the cheapest form of a gaurantee.’ 

Therefore, I don’t think we’ve seen the end of this deal just yet.

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