Shares in APA Group have fallen 11 per cent after Treasurer Josh Frydenberg said he intends to block a $13 billion buyout of Australia's biggest gas pipeline company by Hong Kong's CK Group.
Mr Frydenberg's preliminary view is that the takeover was against the national interest because it would create a concentration of foreign ownership in the sector.
Frydenbeg said the move was not a reflection on CK Infrastructure Holdings Ltd, part of the empire founded by Hong Kong tycoon Li Ka-shing.
Analysts said the move appeared to be partly aimed at preventing Chinese ownership of a strategic asset.
"I don't think its just the China element, but a combination of important assets, concentration of ownership and China," said Morningstar analyst Adrian Atkins.
"I think the Chinese element maybe had a bit more of an impact than the treasurer's letting on ... it'd probably be unpopular with the electorate to have a major asset go to a Chinese firm."
Earlier this year, Australia banned China's Huawei from supplying equipment for a 5G mobile network citing national security risks, while Canberra last year accused Beijing of meddling in domestic affairs.
APA Group shares, which had never traded at the $11 offer price, fell back to pre-bid levels at $8.48, an almost five-month low, wiping $1.2 billion off its market value.
APA said it noted the treasurer's decision and would update shareholders in due course.
