Envestra looks set to be swallowed by a major Hong Kong developer after the Australian gas distributor's biggest shareholder backed a $2.4 billion takeover deal.
APA Group says it will sell its 33 per cent stake in Envestra to a consortium led by Cheung Kong Group, paving the way for the Hong Kong developer and its partners to buy the Australian gas company.
Gas distributor APA had made its own $2.1 billion play for Envestra in March, but was trumped by the Cheung Kong consortium in May.
The Hong Kong developer's offer is subject to receiving the backing of half of Envestra's shareholders.
APA will receive $1.32 for each of its Envestra's shares, reaping $784 million in total and making a pre-tax profit of $430 million.
It plans to use the money to expand its business and for investment projects in the next 18 months.
APA managing director Mick McCormack said the offer from Cheung Kong consortium exceeded its valuation of the Envestra business.
"While our rationale for owning the Envestra business remains sound, APA assessed the value proposition of the offer and concluded that selling out of this investment and redeploying the proceeds in other opportunities will provide better longer term value for APA securityholders," he said in a statement on Thursday.
Envestra shares closed 3.5 cents higher at $1.315, according to preliminary data, while APA was fell five cents to $7.36.
