On the face of it the $A9.58 billion bid by a Canadian-US investment for Australian power distributor AusNet Services is just another rather large deal.
But in reality it is a way for two major Asian companies – Singapore Power (31%) and State Grid of China (19.9%) – to exit Australia via the third offer from Brookfield Asset Management.
The news saw AusNet securities leap 18% to $2.34. They hit a year high of $2.42 in early trading.
Temasek Holdings controls Singapore Power and is one of the key investment funds of the state of Singapore. State Grid is the state-owned electric utility monopoly of China and the largest utility company in the world.
The remaining 49% or so of AusNet is held by Australian shareholders of varying sizes and with the two biggest shareholders taking the money and running, the locals will have no option but to put up their hands in favour of the bid.
Brookfield had raised its offer to $A2.50 a share in cash after making two earlier approaches worth $A2.35-a-share and $A2.45-a-share. The offer price will be reduced by the value of any dividend declared by AusNet prior to a deal completing, AusNet said.
AusNet, which said Brookfield’s first proposal was received on August 30, ended trading last week at $A1.98.
AusNet said it will allow Brookfield Asset Management to carry out due diligence on an exclusive basis to determine whether a binding offer can be made.
“The indicative proposal is subject to several conditions, including due diligence, FIRB approval, unanimous support and recommendation by the Board of AusNet, and execution of a scheme implementation deed,” AusNet said in a statement to the ASX.
The revised proposal was made on behalf of an infrastructure fund that Brookfield manages and follows those two previous conditional proposals from Brookfield.
In May 2013, Singapore Power sold 19.9% of its 51% stake in the company to State Grid of China for $A824 million, valuing the company at $A4.1 billion.
Now it has doubled in value.