IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

Arun has over 15 years’ experience covering the Technology sector. During this time, he has worked with technology start-ups and as an equity analyst in investment banks and independent research firms. He was formerly a Technology Analyst for Canaccord Genuity, Altium Securities, Espirito Santo Investment Bank, Noble Group and Clear Capital. He has a dual Master’s degree in Financial Engineering and Industrial and Operations Engineering from the University of Michigan. He obtained his Bachelor’s degree in Mechanical Engineering from the Indian Institute of Technology, Bombay. He is also a CFA charterholder.

IPOs and Catalysts/Events

AusNet Enters into a Binding Agreement with Brookfield

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<a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">Ausnet Services (AST AU)</a> is a diversified Australian energy infrastructure business with over $11 billion of electricity and gas network and connection assets. AusNet has received a non-binding indicative offer from <a href="https://www.smartkarma.com/entities/apa-group" target="_blank" data-smartkarma-citation="entities:18658:1" rel="noopener">APA Group (APA AU)</a>. APA is offering cash and scrip comprising A$1.820 cash and 0.0878 stapled securities in Australian Pipeline Trust and APT Investment Trust per AusNet share. APA’s offer has an implied value of A$2.60 per share (based on APA’s share price on 20 September) and A$2.56 per share (APA’s last close price). APA expressed frustration that AusNet had offered Brookfield due diligence access as it lobbed its first A$2.32 cash and scrip offer on 1 September, a day after Brookfield’s first offer of A$2.35 per share and made AusNet aware on 16 September it would return with a revised higher offer. As a reminder, AusNet revealed yesterday a conditional, non-binding indicative offer from Brookfield Asset Management for A$2.50 cash per share. The Board announced that it will provide Brookfield exclusive due diligence access. If Brookfield puts forward a binding offer, the Board will also unanimously recommend the offer in the absence of a superior proposal.  APA argues that its offer is superior as it is not conditional on FIRB approval, result in synergies (that AusNet shareholders can benefit through the scrip component) and would be only subject to four weeks of due diligence (vs eight weeks for Brookfield). AusNet responded that it offered Brookfield exclusive due diligence as APA’s original offer was inferior (consideration, structure and certainty) and Brookfield’s improved all-cash offer was conditional on exclusive due diligence. AusNet can only engage with APA following the completion of Brookfield’s eight weeks of due diligence. <div class="content-highlight">AusNet is this year’s first large Australian M&amp;A deal to be contested. Both offers are attractive in terms of historical multiples and share prices. Clearly, the implied value of APA’s offer is less certain and will fluctuate based on APA’s share price. We think that there is another round to this contested takeover battle. At the last close price of A$2.59, AusNet’s shares are trading at a 3.6% premium to Brookfield’s cash offer of A$2.50 and a 1.1% premium to APA’s offer of A$2.56 (based on APA’s last close price).</div>

Ausnet Services (AST AU) is a diversified Australian energy infrastructure business with over $11 billion of electricity and gas network and connection assets. AusNet has received a non-binding indicative offer from APA Group (APA AU). APA is offering cash and scrip comprising A$1.820 cash and 0.0878 stapled securities in Australian Pipeline Trust and APT Investment Trust per AusNet share. APA’s offer has an implied value of A$2.60 per share (based on APA’s share price on 20 September) and A$2.56 per share (APA’s last close price). APA expressed frustration that AusNet had offered Brookfield due diligence access as it lobbed its first A$2.32 cash and scrip offer on 1 September, a day after Brookfield’s first offer of A$2.35 per share and made AusNet aware on 16 September it would return with a revised higher offer. As a reminder, AusNet revealed yesterday a conditional, non-binding indicative offer from Brookfield Asset Management for A$2.50 cash per share. The Board announced that it will provide Brookfield exclusive due diligence access. If Brookfield puts forward a binding offer, the Board will also unanimously recommend the offer in the absence of a superior proposal.  APA argues that its offer is superior as it is not conditional on FIRB approval, result in synergies (that AusNet shareholders can benefit through the scrip component) and would be only subject to four weeks of due diligence (vs eight weeks for Brookfield). AusNet responded that it offered Brookfield exclusive due diligence as APA’s original offer was inferior (consideration, structure and certainty) and Brookfield’s improved all-cash offer was conditional on exclusive due diligence. AusNet can only engage with APA following the completion of Brookfield’s eight weeks of due diligence. AusNet is this year’s first large Australian M&amp;A deal to be contested. Both offers are attractive in terms of historical multiples and share prices. Clearly, the implied value of APA’s offer is less certain and will fluctuate based on APA’s share price. We think that there is another round to this contested takeover battle. At the last close price of A$2.59, AusNet’s shares are trading at a 3.6% premium to Brookfield’s cash offer of A$2.50 and a 1.1% premium to APA’s offer of A$2.56 (based on APA’s last close price).

AusNet’s in a Contested Takeover Battle Between Brookfield and APA