(Adds additional context from CKI announcement)
Australian energy firm DUET Group (DUE) on Monday said its board would recommend a takeover offer from a consortium led by Hong Kong's Cheung Kong Infrastructure Holdings <1038.HK> (CKI) after the price was increased slightly to value the company at A$7.37 billion ($5.51 billion).
DUET shareholders will receive A$3.03 a share, up A$0.03 from the offer CKI made in December, the takeover target said in a statement, recommending the proposal in the absence of a higher offer.
CKI on Monday said in a statement the purchase would be done through a consortium that also included related companies Cheung Kong Property Holdings <1113.HK>, CK Hutchison Holdings <0001.HK> and Power Asset Holdings <0006.HK>.
The deal remains subject to approval from the Foreign Investment Review Board. CKI's bid to acquire state-owned energy firm Ausgrid was rejected by Australia in August on the grounds of national interest.
CKI already controls power grids in the Australian states of South Australia and Victoria, where DUET has other assets, and a nationwide gas distributor. The Hong Kong-based giant was also cleared by the foreign investment regulator to buy another state-owned electricity grid, TransGrid, in 2015, although that asset went to a different buyer.
DUET shares had last traded at A$2.78 on Friday, below the then-A$3.00 a share offer price, amid concerns over whether CKI would receive foreign investment approvals.
DUET chairman Doug Halley said the company believed the A$3.03 a share offer fully recognised the value and future growth platform the management team had created as well as the operating and financing cost savings available to the CKI-led consortium.
In a report issued on Dec. 5, Morningstar analyst Jennifer Song said the value accretion available to CKI from its bid was poised to come primarily from lower debt costs. ($1 = 1.3382 Australian dollars)
