The AusNet Services Ltd (ASX: AST) share price is finally out of a trading halt after the business responded to APA Group’s (ASX: APA) takeover proposal.
Subsequently, AusNet’s share price has jumped 6.78% to $2.52 after it spent much of Tuesday suspended.
AusNet returns serve
Responding to APA’s $2.60 offer, the AusNet board defended its actions. The original $2.32 bid made by APA was inferior to prior offers by Brookfield Asset Management.
Additionally, the AusNet board has retained the right to engage with other parties. Management has the option but not the obligation to accept Brookfield’s renewed offer post due diligence.
The AusNet board also noted that in order to receive a binding proposal from Brookfield, it would have to provide exclusive due diligence. This means that no other acquirer would be able to look at AusNet at the time as Brookfield.
“[APA’s] Original Indicative Proposal was inferior in respect of price, form of consideration, structure and certainty, and that it was in the best interests of AusNet shareholders to engage with Brookfield on its proposal”.
One unhappy camper
APA originally offered $2.32 per share for AusNet on September 1. The offer was a combination of cash and shares in APA group. Investors would be given the choice of receiving cash, shares or a combination of both.
However, APA’s offer was considered to be not in the best interest of shareholders. AusNet had already received a $2.35 and subsequent $2.45 all-cash bid from infrastructure investor Brookfield.
When Brookfield offered $2.50 a share on Monday, AusNet granted the business exclusive due diligence.
Attempting to force AusNet’s hand, APA today increased its offer to $2.60 comprised of shares and cash, surpassing the $2.50 all-cash offered by Brookfield on Monday.
APA expressed its disappointment that AusNet opted to grant exclusive due diligence to Brookfield given APA remained in discussions with AusNet.
The playing field
Despite sidestepping APA’s swing at the board, AusNet has noted it would consider the revised $2.60 proposal following the end of the eight week exclusivity period.
It also emphasised its intention is to find a binding offer, rather than simply non-binding attempts.
Noticeably, AusNet said that there is no certainty of Brookfield’s offer becoming binding.
Essentially, management is leaving the door open for AusNet or even a third bidder.
My take
Zero to APA. One goal to AusNet.
Or love-fifteen in tennis terms.
The board has navigated APA’s bid brilliantly. It has kept its promise to Brookfield of exclusive diligence. Meanwhile, it has been implied to APA and other bidders that the door remains open.
The board is really only interested in binding offers, putting the pressure on bidders to get serious.
Looks like this bidding war is just heating up.
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