The APA Group (ASX: APA) share price is rising after making progress in the takeover battle for Ausnet Services Ltd (ASX: AST).
What’s the latest?
AusNet announced that it has agreed to grant due diligence access to APA Group after entering into a confidentiality deed with APA. APA has also agreed to grant reverse due diligence access to AusNet.
This follows on from the announcement on 15 October 2021 that it would engage with APA about its preliminary proposal to buy AusNet for an offer of a combined $1.82 cash and 0.0878 APA shares per AusNet share.
The due diligence arrangement with APA is non-exclusive. AusNet is still providing Brookfield with due diligence access and it’s continuing to engage with Brookfield about its $2.50 cash offer per Ausnet share.
AusNet said it’s committed to acting in the best interests of shareholders by facilitating competitive tension and working towards securing a binding proposal for shareholders to consider.
This follows the decision and final orders announced by the Takeovers Panel that the no-talk restriction between Brookfield and AusNet would be of “no force” as of 5pm on 19 October 2021.
What happens next?
Well, seemingly there is going to be more waiting for AusNet and APA investors. Sometimes takeover battles can be long, drawn out processes.
This has already been going on for weeks and APA is only just entering into due diligence.
About a month ago, APA gave a presentation to show why its offer was better than the one from Brookfield.
There were five things that APA referred to.
APA said that it has stable business operations, solid cashflow with positive leverage to increasing inflation.
Next, it pointed to its strong distributions and attractive yield. At the moment, the $0.53 forecast distribution is a future yield of 6.2%.
It has a growing organic growth pipeline of $1.3 billion over the next three years.
On top of that, APA said it has strong ESG (environmental, social and governance) credentials with a net zero emission ambition for 2050.
Finally, APA talks about its strong balance sheet, low cost of capital and high demand for APA’s investment grade credit.
Summary thoughts about the APA share price
I believe that APA is a quality business with a lot going for it. The AusNet acquisition would make a lot of sense and diversify the business more into electricity and transmission.
Considering how low interest rates are, I think that APA looks like an attractive infrastructure idea today.
APA is one of the leading ASX dividend shares that I’ve got my eyes on.
