Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>There is no shortage of opinions on whether FIRB will back/oppose the Santos Offer, as Australia seeks to balance attracting foreign investment with the need to protect national interests.</li>
<li>The key question is how Australia benefits from Santos becoming a foreign-owned national oil/gas company? Can ADNOC accelerated/bolster existing projects/operations? Can ADNOC better negotiate native title rights for domestic supply? </li>
<li>And should Australia readily sell 100% in a critical infrastructure complex; yet if the roles were reversed, foreigners are capped at 49% ownership in UAE's similar critical assets? </li>
</ul>


There is no shortage of opinions on whether FIRB will back/oppose the Santos Offer, as Australia seeks to balance attracting foreign investment with the need to protect national interests.
The key question is how Australia benefits from Santos becoming a foreign-owned national oil/gas company? Can ADNOC accelerated/bolster existing projects/operations? Can ADNOC better negotiate native title rights for domestic supply? 
And should Australia readily sell 100% in a critical infrastructure complex; yet if the roles were reversed, foreigners are capped at 49% ownership in UAE's similar critical assets? 


Santos (STO AU): Why FIRB Should Block ADNOC's Takeover

<div>
<p>Since 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 grant Brookfield due diligence access after receiving a revised non-binding Offer of A$2.50/share, up from $2.35/share on the 30 August, there has been a knotty backdrop involving competing bidder <a href="https://www.smartkarma.com/entities/apa-group" target="_blank" data-smartkarma-citation="entities:18658:1" rel="noopener">APA Group (APA AU)</a>. A rough timeline is as follows.</p>
<table class="table table-striped">
<colgroup> <col> <col> </colgroup>
<tbody>
<tr>
<td rowspan="2" style="width: 84pt;">
<h3>Date</h3>
</td>
<td rowspan="2" style="width: 323pt;">
<h3>Data in the Date</h3>
</td>
</tr>
<tr></tr>
<tr>
<td style="text-align: left; width: 84pt;">1-Sep-21</td>
<td style="width: 323pt;">APA approached AusNet with a non-binding proposal of A$2.32</td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">16-Sep-21</td>
<td style="width: 323pt;">APA made AusNet aware it intended to make a revised proposal</td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">20-Sep-21</td>
<td style="width: 323pt;">Brookfield's exclusive eight-week due diligence</td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">21-Sep-21</td>
<td style="width: 323pt;">APA announced its "superior proposal", involving a non-binding indicative Offer by way of a Scheme for A$2.60/share in cash and scrip</td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">23-Sep-21</td>
<td style="width: 323pt;">APA lodged an application to the Takeovers Panel, criticising the exclusivity arrangements with Brookfield</td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">28-Sep-21</td>
<td style="width: 323pt;">APA extended the deadline to be granted due diligence for as long as the Takeovers Panel application remained under review. </td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">1-Oct-21</td>
<td style="width: 323pt;">Brookfield lodged its own Panel application contending APA's ASX announcements on the 24 and 29 September contained misleading and incorrect information</td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">8-Oct-21</td>
<td style="width: 323pt;">The Panel declined to conduct proceedings wrt to Brookfield's application</td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">15-Oct-21</td>
<td style="width: 323pt;">The Panel declared there were unacceptable circumstances:</td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">15-Oct-21</td>
<td style="width: 323pt;">AusNet announced it would now engage with APA</td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">23-Oct-21</td>
<td style="width: 323pt;">AusNet will now provide due diligence access to APA in parallel with Brookfield.</td>
</tr>
<tr>
<td style="text-align: left; width: 84pt;">28-Oct-21</td>
<td style="width: 323pt;">The ACCC commenced its review of APA's bid for AusNet. </td>
</tr>
<tr>
<td colspan="2" style="width: 407pt;"><em>Source: Various ASX announcements</em></td>
</tr>
</tbody>
</table>
</div>
<h3>The New News</h3>
<div>
<p>Brookfield has now bumped its Offer to $2.65/share, in cash, and AusNet has <a href="https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02445508-3A579944?access_token=83ff96335c2d45a094df02a206a39ff4" target="_blank" rel="noopener">entered</a> into a Scheme Implementation Deed (SID).</p>
<p>The Offer has unanimous board support. Singapore Power with 32.74% has said it would vote in favour of the Scheme. No word from China's State Grid.</p>
<p>A requirement under the SID is that AusNet cease discussions with other parties. AusNet has terminated APA's due diligence access.</p>
<p>APA is free to make a superior proposal - whose cash/scrip Offer is currently $2.54/share based on last Friday's close. </p>
<p>Brookfield is very much in the driving seat here. </p>
<p>More below the fold.</p>
<p></p>
</div>


Since Victorian electricity operator AusNet Services (AST AU) announced it would grant Brookfield due diligence access after receiving a revised non-binding Offer of A$2.50/share, up from $2.35/share on the 30 August, there has been a knotty backdrop involving competing bidder APA Group (APA AU). A rough timeline is as follows.

   



Date


Data in the Date




1-Sep-21
APA approached AusNet with a non-binding proposal of A$2.32


16-Sep-21
APA made AusNet aware it intended to make a revised proposal


20-Sep-21
Brookfield's exclusive eight-week due diligence


21-Sep-21
APA announced its "superior proposal", involving a non-binding indicative Offer by way of a Scheme for A$2.60/share in cash and scrip


23-Sep-21
APA lodged an application to the Takeovers Panel, criticising the exclusivity arrangements with Brookfield


28-Sep-21
APA extended the deadline to be granted due diligence for as long as the Takeovers Panel application remained under review. 


1-Oct-21
Brookfield lodged its own Panel application contending APA's ASX announcements on the 24 and 29 September contained misleading and incorrect information


8-Oct-21
The Panel declined to conduct proceedings wrt to Brookfield's application


15-Oct-21
The Panel declared there were unacceptable circumstances:


15-Oct-21
AusNet announced it would now engage with APA


23-Oct-21
AusNet will now provide due diligence access to APA in parallel with Brookfield.


28-Oct-21
The ACCC commenced its review of APA's bid for AusNet. 


Source: Various ASX announcements




The New News

Brookfield has now bumped its Offer to $2.65/share, in cash, and AusNet has entered into a Scheme Implementation Deed (SID).
The Offer has unanimous board support. Singapore Power with 32.74% has said it would vote in favour of the Scheme. No word from China's State Grid.
A requirement under the SID is that AusNet cease discussions with other parties. AusNet has terminated APA's due diligence access.
APA is free to make a superior proposal - whose cash/scrip Offer is currently $2.54/share based on last Friday's close. 
Brookfield is very much in the driving seat here. 
More below the fold.



AusNet (AST AU) Enters Scheme With Brookfield

Last Week in Event SPACE: Japan Post, Singapore Press, Siam Future, 51job, Kunlun, Shinsei Bank

<div>
<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>
</div>
<div>
<p>I number 46, mostly firm, deals around the region.</p>
</div>
<div>
<p>More below the fold.</p>
</div>


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

<div>
<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>
</div>
<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>
<blockquote>
<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>
</blockquote>
<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>
<div>
<p>More below the fold.</p>
</div>


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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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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Santos (STO AU): Why FIRB Should Block ADNOC's Takeover

Santos Ltd (STO AU) dives ~11% after Abu Dhabi walks away, two days before a formal deadline. "Sensationally ended", as The Australian words it? I...

David Blennerhassett

AusNet (AST AU) Enters Scheme With Brookfield

Trading tight at gross/annualised spread of 1.9%/4.8%, assuming late March completion. I would not chase it further. I'm not entirely confident...

David Blennerhassett

Last Week in Event SPACE: Japan Post, Singapore Press, Siam Future, 51job, Kunlun, Shinsei Bank

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

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

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