Hong Kong billionaire Li Ka-shing’s Cheung Kong Infrastructure on Monday offered Aus$7.3 billion (US$5.4 billion) in a takeover tilt at Australia’s Duet Group, which said it was considering the bid.
The unsolicited and conditional Aus$3 per share offer for the energy utility asset owner represented a near 28% premium to Duet’s closing share price on Friday.
The move sent the stock almost 15% higher to Aus$2.69 in afternoon trade Monday.
“The boards of the Duet Group are currently evaluating the proposal and at this time security holders are advised to take no action as there is currently no certainty the proposal will proceed further,” the target company said in a statement.
Duet owns electricity and gas networks in Victoria state as well as Western Australia’s main gas transmission line.
The bid is Li’s latest attempt to bolster his Australian business this year after suffering a blow when a proposal to buy the country’s largest electricity network, AusGrid, was rejected on national security grounds in August.
Cheung Kong Infrastructure already has significant investments in Australia’s energy sector, including in electricity networks in Victoria and South Australia.
All foreign investments are welcomed as long as they are legitimate. The Foreign Investment Board should not raise red flags or trigger xenophobia under the guise of national security, which can be surveil and managed through ensuring that the board of any corporation must only have Australian citizens as directors and that foreign control company be subject to annual espionage and spyware and cyber security audit by ASIO. The Reserve Bank rather should be roped in to ensure the funds coming in as investments are not corrupt or laundered money. The focus is on preventing the ill gotten gains of corrupt public servants or businessman or drug lords coming into Australia.
It is unethical for Li and other Asian moving their money to rich nation where people do not need them. Indonesia, Philippine, India, and many potential up coming countries in third world needed these investmemt badly, they just need to work harder to find partners who have the technology and know how to invest in infrastructure that will benefit people there as well as the invested.
LOL. If those countries want foreign investment money, they need to get their acts together and make their investment environment effective, less-corrupt, and offer a resonably good chance of decent investment return. If it is your own money, would you really want to throw your money into a black hole knowing it is infested by corrupt and incompetent officials and won’t see your money back?
Absurd. Investors who invest where return is greatest increase wealth allowing more and more future investment and development. Investors who invest in low yield investments go bankrupt and create nothing in the future. If countries want investment then they should enact the legal frameworks that secure investor confidence, have the policies that permit development without constant extortion from grifting politicians and unions, and in general make themselves into good places to invest. Even in the United States, long a haven for investment, when the Obama administration enacted expensive unpredictable regulations, raised the industrial world’s highest corporate tax rate, and allowed endless uncertainties in policies as part of a program of political intimidation, investment fell and the country has had its longest period of economic stagnation since the Great Depression. If that happens even to the US, how much more does corruption, an impossible tax and regulatory environment, extortionate government and politicians adversely affect the Phillippines or Indonesia or India. India is the classic example of a country that started to clean up its’ act, got a lot of investment, then had a political turn to an anti-capitalist government and very politicized policies ignoring international intellectual property laws and now has seen significant disinvestment from pharmaceuticals and tech companies. Li Ka-shing is investing in Australia because it is a rational environment to invest in – exactly as he should.
If countries want to attract investments like Australia, they should be as honest, non-corrupt, regulatorily predictable, and economically rational and fair-minded in their behavior as Australia.