The takeover proposal values GasNet significantly higher than the amount being offered by another suitor û a partnership between Babcock & Brown Infrastructure (BBI) and Australian Pipeline Trust (APT) û which first bid for the Victorian gas transmission company back in mid-June.
BBI is itself a listed infrastructure trust and has forged the trail in publicly-traded specialist funds in Australian along with rival Macquarie Infrastructure Group.
BBI and APT already own 14.2% of GasNetÆs shares and had been offering a scrip swap of 1.545 BBI shares for each GasNet stapled security.
Colonial First StateÆs cash offer has been wholeheartedly recommended by GasNetÆs board in stark contrast to the response given to BBIÆs offer last week.
GasNet and advisors Goldman Sachs JBWere said last week that BBIÆs offer price of A$2.40 per share (based on BBIÆs current share price) was too low and raised questions about capital gains tax roll-over relief for shareholders.
An independent experts report has placed the value of GasNet shares at between A$2.72 and A$2.93 and prior to entering a trading halt early yesterday morning, the shares were selling for A$2.90 on the ASX.
GasNetÆs board is so certain that shareholders will accept the new deal that it has agreed to various exclusivity provisions and a break fee of A$4.2 million, leaving the BBI camp in a quandary over the possibility of a counter-proposal.
Colonial First StateÆs interest in the transmission company represents a new trend in Australian infrastructure where traditional fund managers are now competing with specialists for infrastructure assets.
Late last year, Colonial said it would make a concerted push into the infrastructure and alternative asset space. It already has interests in the Central Ranges gas pipeline, Hazelwood power station and Inexus in the UK. And in June it was involved in a consortium bid for BAA plc û the owner and operator of seven UK airports.
If it is successful with GasNet, the purchase will be financed by the Commonwealth Bank and then transferred into a fund.
ôWe are attracted to GasNetÆs high quality assets, stable cashflows and the transparent regulatory environment,ö says James OÆLeary, who was hired to head property and alternative investments at Colonial at the end of last year. ôThe transaction is important as opportunities to acquire quality domestic infrastructure assets are becoming increasingly limited.ö
Colonial First State is being advised by JPMorgan.
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