Billionaire Li Ka-shing to acquire Australia's Duet Group in A$7.4b deal

[SYDNEY] Hong Kong billionaire Li Ka-shing's Cheung Kong Infrastructure Holdings Ltd agreed to buy Australia's Duet Group with a sweetened offer of A$7.4 billion (S$8 billion) as it seeks to expand its global power and gas pipeline assets.

Duet recommended the increased offer from CKI of A$3.03 a share for the infrastructure company, which includes a special dividend of 3 Australian cents a share. The dividend component marks an increase from CKI's original bid of A$3 a share in December and represents a 29 per cent premium to Duet's pre-offer trading price. It's 9 per cent more that Duet's close on Friday of A$2.78.

Duet, which expects the transaction to be implemented by mid-May, said in a statement Monday that the offer recognises the company's "value and future growth platform." The deal is subject to regulatory approvals including clearance from the Australian government's Foreign Investment Review Board and a vote from Duet shareholders.

Buying Duet pipeline and energy distribution businesses is the latest attempt by Mr Li to bolster his Australian business. The tycoon experienced a setback last August when the Australian government blocked CKI and State Grid Corp of China from buying a majority stake in state-owned power network Ausgrid citing national security concerns.

CKI already owns stakes in Australian assets including SA Power Networks, Powercor Australia and Australian Gas Networks. The Duet deal would be Mr Li's biggest acquisition in the nation, according to data compiled by Bloomberg.

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 also help Mr Li diversify away from the UK, the biggest profit generator for his flagship firm CK Hutchison Holdings Ltd, as Britain's decision to split off from the European Union threatens to undermine the economy.

BLOOMBERG