Australia has derailed a $13 billion Chinese takeover of the country’s biggest gas pipeline

  • The Federal Government is about to reject a bid by a Hong Kong company for Australia’s biggest transmission system owner, APA.
  • Treasurer Josh Frydenburg says his preliminary view is that the takeover by Li Ka-shing’s CK Group would not be in the national interest.
  • He will make a final decision in two weeks.

Australia says a $13 billion takeover by Hong Kong-based CK Infrastructure Holdings of gas pipeline company APA Group would be against the “national interest”.

Treasurer Josh Frydenburg says his preliminary view is that the acquisition of APA would result in an undue concentration of foreign ownership in Australia’s most significant gas transmission business.

“I intend to make a final decision under the formal process within two weeks,” he says.

The Foreign Investment Review Board (FIRB) was unable to reach a unanimous decision, expressing its concern about the national interest implications of a dominant foreign player in the gas and electricity sectors.

APA is the largest gas transmission system owner in Australia, owning 15,000 km of pipelines representing 56% of Australia’s gas pipeline transmission system, including 74% of NSW and Victorian pipelines and 64% in the NT.

It also supplies gas for part of all mainland capital cities’ consumption, gas-fired electricity generation assets and liquefied natural gas exports.

“My preliminary view is not an adverse reflection on CK Group or the individual companies,” says Frydenberg.

“CK Group companies are already a substantial investor in Australia’s gas and electricity sectors and a significant provider of infrastructure services that millions of Australians rely upon.

“The Australian Government welcomes CK Group’s investments in Australia and its broader contribution to the Australian economy.”

CK Infrastructure Holdings is part of the business founded by Hong Kong billionaire Li Ka-shing.

Unitholders of APA had already accepted the $11.00 cash bid, valuing the company at $12.97 billion. Its shares closed yesterday at $9.51.

The Hong Kong company last year bought Australian energy utility assets group Duet — which owns utility assets valued at $11.1 billion, including the Dampier to Bunbury gas pipeline in Western Australia, United Energy in Victoria and projects in the US and UK — for $7.37 billion.

CK Infrastructure, which owns power grids in South Australia and Victoria, is the same group which tired to buy NSW energy infrastructure body Ausgrid but was rejected by then-treasurer Scott Morrison on national security grounds.