Billionaire Li Ka-Shing Bids $5.4 Billion for Australia’s Duet

  • Cheung Kong Infrastructure offers A$3 per share in cash
  • CKI may need local partner to secure Australia’s approval: RBC

Billionaire Li Ka-shing.

Photographer: Justin Chin/Bloomberg

Hong Kong billionaire Li Ka-shing’s Cheung Kong Infrastructure Holdings Ltd. offered A$7.3 billion ($5.4 billion) in cash for Australia’s Duet Group as it seeks to expand its power and gas pipeline assets.

CKI offered A$3 a share for the infrastructure company -- 28 percent more than Friday’s close -- Sydney-based Duet said Monday in a statement. The company’s board said it’s evaluating the non-binding and conditional offer that pushed its shares to the highest in eight years.

The bid is the latest attempt by Li to bolster his Australian business this year. The tycoon experienced a setback in August when Australia’s Foreign Investment Review Board blocked CKI from buying a majority stake in state-owned power network Ausgrid on security concerns.

“FIRB approvals remain a significant barrier to a deal proceeding,” Paul Johnston, an analyst at RBC Capital Markets in Melbourne, said in a note to clients Sunday after the deal was first reported. CKI may have to take on an Australian partner to help secure approval, Johnston said, and noted local pension fund UniSuper already has a 16 percent stake.

For a breakdown of the offer, click here.

Duet’s shares jumped as much as 20 percent to A$2.82, the highest since Sept. 10, 2008. They traded 18 percent higher at A$2.77 at 11:08 a.m. in Sydney. UniSuper’s investment team is waiting for more information on the deal, a spokeswoman said in a telephone message.

CKI already owns stakes in Australian assets including SA Power Networks, Powercor Australia and Australian Gas Networks. The Duet deal would be Li’s biggest acquisition in the nation, according to data compiled by Bloomberg. Wendy Tong Barnes, a spokeswoman for CKI, declined to comment. 

Macquarie Capital is advising Duet, according to the statement.

Duet’s assets include the Dampier-Bunbury pipeline in Western Australia, a stake in electricity distributor United Energy, gas distribution business Multinet Gas, pipelines business DBP Development Group and Energy Developments Ltd., according to Duet’s website.

Expanding his business in Australia would help Li diversify from the U.K., the biggest profit generator for his flagship firm CK Hutchison Holdings Ltd., as Britain’s decision to split from the European Union threatens to undermine the economy.

Separately, CK Hutchison said late last week that Indian tax authorities had proposed the conglomerate pay HK$8.9 billion of capital gains tax on a transaction in 2007, when it sold its Indian telecom business to Vodafone International Holdings BV. CK Hutchison said it has sought legal advice and believes the request won’t impose any liability on the company or affect its financial condition. CK Hutchison also announced last week it will sell aircraft leasing assets to affiliate Cheung Kong Property Holdings Ltd. for almost $1 billion.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE