Envestra to APA: Thanks, but no thanks

Natural gas infrastructure business APA Group (ASX: APA) isn’t happy with Envestra  (ASX: ENV). After announcing on 16 July that it had approached Envestra with a merger proposal that would “offer full value to Envestra shareholders” and serve as a “logical next step in creating Australia’s pre-eminent energy infrastructure group,” APA released a statement today noting its surprise that its offer had been rejected.

While the company already owns 33% of Envestra and operates its gas distribution networks and pipelines, Envestra’s Independent Board Committee seems to think APA has already invested enough in Envestra. APA expressed surprise that the Board rejected its merger proposal without first discussing its decision with APA.

According to the release, the offer translated into a regulated asset base multiple of approximately 1.4 times for Envestra shareholders, something the Group considered “an attractive value proposition.” APA stated that it will release further announcements as it decides on next steps.

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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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