Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.</p>
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<p>I number 46, mostly firm, deals around the region.</p>
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<p>More below the fold.</p>
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This insight provides a quick summary of gross/annualised (where possible) spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and how those spreads have changed over the last week; plus the next hard events over the coming weeks.


I number 46, mostly firm, deals around the region.


More below the fold.


Asia-Pac Weekly Risk Arb Summary: Singapore Press, Ausnutria, Shinsei, Golden Throat, Over The Wire

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<p>Back on the 20 September, Victorian electricity operator <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">AusNet Services (AST AU)</a>  <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02423286-3A576179?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it would open its books to Brookfield after receiving a revised non-binding Offer of A$2.50/share, up from $2.35/share on the 30 August.</p>
<p>It turned out that <a href="https://www.smartkarma.com/entities/apa-group" target="_blank" data-smartkarma-citation="entities:18658:1" rel="noopener">APA Group (APA AU)</a> had approached AusNet with a non-binding proposal of A$2.32 on the 1 September, and that APA had made AusNet aware on 16 September it intended to make a revised proposal. AusNet opted to grant Brookfield around 8 weeks of exclusive due diligence in return for a "<em>materially increased indicative</em>" offer.</p>
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<p>Undeterred,  APA <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02423895-2A1324638?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> on the 21 September its "<em>superior proposal</em>", involving a non-binding indicative Offer by way of a Scheme for A$2.60/share in cash and scrip. That superiorness was expounded in APA's presentation deck as follows:</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/238/273/original/image?1635466450" class="editor-image img-responsive" data-smartkarma-image-id="238273"></figure>
<p style="text-align: left;"><em>Source: APA's presentation deck - <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02425518-2A1325440?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">page 15</a></em></p>
<p style="text-align: left;">APA also lodged an <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02425258_PS-3A576544?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">application</a> to the Takeovers Panel on the 23 September, criticising the exclusivity arrangements with Brookfield, and sought final orders such that that the exclusivity arrangements “be terminated" to permit AusNet to respond to APA’s proposal (and any other competing proposals).</p>
<p style="text-align: left;">APA's proposal was conditional on confirmation from AusNet by the 28 September granting due diligence access. That timeline appeared overly aggressive, and not surprisingly, APA <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02427369_PS-3A576904?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">extended</a> the deadline to be granted due diligence for as long as the Takeovers Panel application remained under review. </p>
<p style="text-align: left;">Brookfield lodged its own Panel application on the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02430780_PS-3A577397?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">1 October</a> that APA's ASX announcements on the 24 and 29 September contained misleading and incorrect information. The Panel <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02433414_PS-3A577836?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">declined</a> to conduct proceedings. </p>
<p style="text-align: left;">On the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02436419_PS-3A578351?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">15 October</a>, the Panel declared there were unacceptable circumstances:</p>
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<p style="text-align: left;">The Panel has not sought to second guess the commercial reasons of the AusNet board in pursuing the Brookfield proposal, but considered that the effect of the circumstances, in totality, are unacceptable having regard to sections 602 and 657A of the Act.</p>
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<p>This decision permitted AusNet to respond to APA’s proposal by the 19 October. AusNet announced on the 15 October it would now engage with APA, and that (as per the <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02440134-3A579027?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">25 October announcement</a>) it will provide due diligence access to APA in parallel with Brookfield.</p>
<p><strong>The New News</strong></p>
<p>Australia's competition regulatory, the ACCC, has now <a href="https://www.accc.gov.au/public-registers/mergers-registers/public-informal-merger-reviews/apa-group-ausnet-services-ltd" target="_blank" rel="noopener">commenced i</a>ts review of APA's bid for AusNet. </p>
<p>In a similar vein to Brookfield requiring FIRB sign-off, this ACCC review was expected. But it is worth a quick look at what is being investigated.</p>
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<p>More below the fold.</p>
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Back on the 20 September, Victorian electricity operator AusNet Services (AST AU)  announced it would open its books to Brookfield after receiving a revised non-binding Offer of A$2.50/share, up from $2.35/share on the 30 August.
It turned out that APA Group (APA AU) had approached AusNet with a non-binding proposal of A$2.32 on the 1 September, and that APA had made AusNet aware on 16 September it intended to make a revised proposal. AusNet opted to grant Brookfield around 8 weeks of exclusive due diligence in return for a "materially increased indicative" offer.

Undeterred,  APA announced on the 21 September its "superior proposal", involving a non-binding indicative Offer by way of a Scheme for A$2.60/share in cash and scrip. That superiorness was expounded in APA's presentation deck as follows:

Source: APA's presentation deck - page 15
APA also lodged an application to the Takeovers Panel on the 23 September, criticising the exclusivity arrangements with Brookfield, and sought final orders such that that the exclusivity arrangements “be terminated" to permit AusNet to respond to APA’s proposal (and any other competing proposals).
APA's proposal was conditional on confirmation from AusNet by the 28 September granting due diligence access. That timeline appeared overly aggressive, and not surprisingly, APA extended the deadline to be granted due diligence for as long as the Takeovers Panel application remained under review. 
Brookfield lodged its own Panel application on the 1 October that APA's ASX announcements on the 24 and 29 September contained misleading and incorrect information. The Panel declined to conduct proceedings. 
On the 15 October, the Panel declared there were unacceptable circumstances:

The Panel has not sought to second guess the commercial reasons of the AusNet board in pursuing the Brookfield proposal, but considered that the effect of the circumstances, in totality, are unacceptable having regard to sections 602 and 657A of the Act.

This decision permitted AusNet to respond to APA’s proposal by the 19 October. AusNet announced on the 15 October it would now engage with APA, and that (as per the 25 October announcement) it will provide due diligence access to APA in parallel with Brookfield.
The New News
Australia's competition regulatory, the ACCC, has now commenced its review of APA's bid for AusNet. 
In a similar vein to Brookfield requiring FIRB sign-off, this ACCC review was expected. But it is worth a quick look at what is being investigated.

More below the fold.


AusNet (AST AU): ACCC Commences Informal Review

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<p>Yesterday Victorian electricity operator <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">AusNet Services (AST AU)</a>  <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02423286-3A576179?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it would open its books to Brookfield after receiving a revised non-binding Offer of A$2.50/share. It is understood Brookfield made a A$2.35/share Offer on the 30 August, followed by $2.45/share, before all parties settled on $2.50/share.</p>
<p>As it turns out, according to <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 had approached AusNet with a non-binding proposal of A$2.32 on the 1 September, and that APA had made AusNet aware last Thursday (16 September) it intended to make a revised proposal.</p>
<p>APA sounded out AusNet’s major shareholders prior to its initial approach, and that APA understood Singapore Power was supportive of APA and AusNet engaging in discussions. APA had also discussed the initial proposal directly with State Grid. </p>
<p>Seems someone didn't get the memo.</p>
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<p>APA is disappointed that AusNet has purported to enter into a period of exclusivity with Brookfield for effectively eight weeks, notwithstanding AusNet’s knowledge of the pending revised, and potentially superior proposal, from APA.</p>
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<p>The "superior proposal", <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02423895-2A1324638?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> this morning, is a non-binding indicative Offer by way of a Scheme for A$2.60/share in cash and scrip.</p>
<p>Apart from the higher price, APA's Offer enables AusNet shareholders to participate in the back-end via APA scrip, plus there is no FIRB conditionality.</p>
<p>In addition, APA would only require 4 weeks of due diligence, compared to seven to eight weeks for Brookfield.</p>
<p>For now, APA will have to sit tight until the completion of Brookfield's exclusive due diligence. APA's proposal is conditional on AusNet granting due diligence access by the 28 September. </p>
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<p>More below the fold.</p>
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Yesterday Victorian electricity operator AusNet Services (AST AU)  announced it would open its books to Brookfield after receiving a revised non-binding Offer of A$2.50/share. It is understood Brookfield made a A$2.35/share Offer on the 30 August, followed by $2.45/share, before all parties settled on $2.50/share.
As it turns out, according to APA Group (APA AU), APA had approached AusNet with a non-binding proposal of A$2.32 on the 1 September, and that APA had made AusNet aware last Thursday (16 September) it intended to make a revised proposal.
APA sounded out AusNet’s major shareholders prior to its initial approach, and that APA understood Singapore Power was supportive of APA and AusNet engaging in discussions. APA had also discussed the initial proposal directly with State Grid. 
Seems someone didn't get the memo.

APA is disappointed that AusNet has purported to enter into a period of exclusivity with Brookfield for effectively eight weeks, notwithstanding AusNet’s knowledge of the pending revised, and potentially superior proposal, from APA.



The "superior proposal", announced this morning, is a non-binding indicative Offer by way of a Scheme for A$2.60/share in cash and scrip.
Apart from the higher price, APA's Offer enables AusNet shareholders to participate in the back-end via APA scrip, plus there is no FIRB conditionality.
In addition, APA would only require 4 weeks of due diligence, compared to seven to eight weeks for Brookfield.
For now, APA will have to sit tight until the completion of Brookfield's exclusive due diligence. APA's proposal is conditional on AusNet granting due diligence access by the 28 September. 


More below the fold.


AusNet Services (AST AU): Spurned APA Trumps Brookfield's Proposal

<p>Victorian electricity operator <a href="https://www.smartkarma.com/entities/ausnet-services" target="_blank" data-smartkarma-citation="entities:10293:1" rel="noopener">AusNet Services (AST AU)</a> has <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02423286-3A576179?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">announced</a> it will open its books to Brookfield after receiving a revised non-binding Offer of A$2.50/share, up from A$2.35 initially. The cash consideration will be reduced to the extent of any dividends paid. </p>
<p>The due diligence is on an exclusive basis. If a firm Offer is tabled, AusNet's board will unanimously recommend the proposal to its shareholders.</p>
<p>A firm bid will be subject to FIRB and shareholder approval. Neither Singapore Power nor China's State Grid  - AusNet's two largest shareholders - have made their intentions known as to the proposal.</p>
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<p>Following careful consideration, and consultation with its advisers, the board of AusNet considers that it is in the best interests of AusNet’s shareholders to engage further with Brookfield on the indicative proposal.</p>
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<p>The Offer price is full. Assuming Singapore Power and the State Grid are supportive, this is a done deal.</p>
<p>More below the fold.</p>

Victorian electricity operator AusNet Services (AST AU) has announced it will open its books to Brookfield after receiving a revised non-binding Offer of A$2.50/share, up from A$2.35 initially. The cash consideration will be reduced to the extent of any dividends paid. 
The due diligence is on an exclusive basis. If a firm Offer is tabled, AusNet's board will unanimously recommend the proposal to its shareholders.
A firm bid will be subject to FIRB and shareholder approval. Neither Singapore Power nor China's State Grid  - AusNet's two largest shareholders - have made their intentions known as to the proposal.

Following careful consideration, and consultation with its advisers, the board of AusNet considers that it is in the best interests of AusNet’s shareholders to engage further with Brookfield on the indicative proposal.

The Offer price is full. Assuming Singapore Power and the State Grid are supportive, this is a done deal.
More below the fold.

AusNet Services (AST AU) Opens Its Books to Brookfield

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<p>Just under two weeks after <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02395702-2A1310049?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">rejecting</a> two take-private proposals from KKR and Ontario Teachers’ Pension Plan Board (OTPPB), Aussie poles and wires company <a href="https://www.smartkarma.com/entities/spark-infrastructure-group" target="_blank" data-smartkarma-citation="entities:595:1" rel="noopener">Spark Infrastructure (SKI AU)</a> announced <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02399952-2A1312120?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">support</a> for the Consortium's improved proposal of $2.95/share. The Offer was up from the initial Offer of $2.70/share. Due diligence was subsequently afforded.</p>
<p>On the 10 August, Spark <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02405270-2A1314740?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">received</a> a request from the Consortium to engage with Public Sector Pension Investment Board (PSP), Canada's largest pension investment managers.  OTTPB and KKR said their interest in Spark is not contingent on PSP receiving all internal and external approvals to participate in the Consortium's revised Offer.</p>
<p>A firm Offer has now been <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02409984-2A1317108?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">tabled</a> and a SID entered into with KKR, OTTPB, and PSP. The terms remain the same. Spark's board unanimously recommends the Offer. The Scheme Meeting is expected to be held by the end of 2021.</p>
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<p>As discussed in <em><a href="https://skr.ma/LdjsX" target="_blank" rel="noopener">Spark Infrastructure (SKI AU): KKR &amp; OTPPB Pay Up</a></em>, $2.95/share appeared a full price. This looks done to me.</p>
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<p>More below the fold.</p>
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Just under two weeks after rejecting two take-private proposals from KKR and Ontario Teachers’ Pension Plan Board (OTPPB), Aussie poles and wires company Spark Infrastructure (SKI AU) announced support for the Consortium's improved proposal of $2.95/share. The Offer was up from the initial Offer of $2.70/share. Due diligence was subsequently afforded.
On the 10 August, Spark received a request from the Consortium to engage with Public Sector Pension Investment Board (PSP), Canada's largest pension investment managers.  OTTPB and KKR said their interest in Spark is not contingent on PSP receiving all internal and external approvals to participate in the Consortium's revised Offer.
A firm Offer has now been tabled and a SID entered into with KKR, OTTPB, and PSP. The terms remain the same. Spark's board unanimously recommends the Offer. The Scheme Meeting is expected to be held by the end of 2021.


As discussed in Spark Infrastructure (SKI AU): KKR &amp; OTPPB Pay Up, $2.95/share appeared a full price. This looks done to me.


More below the fold.


Spark Infrastructure (SKI AU): KKR/OTPPB/PSP's Firm Offer

Australia

DUET Group invests in energy utility assets located in Australia and New Zealand.  The Group's investment assets include gas pipelines and electricity distribution networks.

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DUET Group (DUE AU)

Asia-Pac Weekly Risk Arb Summary: Singapore Press, Ausnutria, Shinsei, Golden Throat, Over The Wire

This insight provides a summary of gross/annualised spreads (on deals discussed on Smartkarma) across Asia-Pacific as at the last trading date, and...

David Blennerhassett

AusNet (AST AU): ACCC Commences Informal Review

You have two significant players in a competitive bidding situation. Entering here at $2.47 (as I type) - below both Offers - appears a reasonable...

David Blennerhassett

AusNet Services (AST AU): Spurned APA Trumps Brookfield's Proposal

Assuming APA is granted DD - after the completion of Brookfield's - this transaction may drag into 2Q22. You have two large players in the mix. I...

David Blennerhassett

AusNet Services (AST AU) Opens Its Books to Brookfield

Assuming an estimated effective date towards the end of March 2022 - today's close is around a gross/annualised return of 5.9%/11.6%. Not bad....

David Blennerhassett

Spark Infrastructure (SKI AU): KKR/OTPPB/PSP's Firm Offer

Trading tight at a 2.0%/6.6% gross/annualised spread. Franking credits may add up to an additional A$0.05/share to those shareholders who can take...

David Blennerhassett

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