Ausnet (ASX:AST) share price rockets 20% on fresh takeover bid

Ausnet shares are on the move after Brookfield Asset Management makes a play for its assets.

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The Ausnet Services Ltd (ASX: AST) share price has soared into the green on Monday after the electricity distributor made a key announcement earlier.

Ausnet stated that Brookfield Asset Management has made a non-binding offer to acquire all of its issued shares at $2.50 per share.

The Ausnet share price opened 20% higher at $2.38 this morning.

Let’s investigate further.

What was in Ausnet’s announcement?

Ausnet advised that it received an “unsolicited, indicative, non-binding and conditional proposal” from Brookfield to acquire all of its issued shares, by way of a scheme agreement.

Brookfield put the offer forward at $2.50 per share, which signifies a 26% premium to Ausnet’s closing price of $1.98 on Friday, and a 35% premium to its 30-day weighted average share price, as per the release.

The revised proposal was made on behalf of an infrastructure fund that Brookfield manages and follows two previous conditional proposals from Brookfield. The first was on 30 August for $2.35/share, and the subsequent offer was $2.45/share.

So it appears Brookfield is hungry for Ausnet’s $11 billion of 100% owned and operated assets – which would likely slot into its diversified infrastructure portfolio, a behemoth with $95 billion in assets under management (AUM).

The indicative proposal is subject to several conditions, including due diligence, regulatory approval and unanimous support from Ausnet’s board.

Ausnet said in the announcement:

Following careful consideration and consultation with advisers, the board of Ausnet considers that it is in the best interest’s of Ausnet’s shareholders to engage further with Brookfield on the indicative proposal.

Accordingly, Ausnet has decided to provide Brookfield with the opportunity to conduct due diligence on an exclusive basis to enable it to put forward a binding offer.

If Brookfield makes the offer binding at $2.50 per share, the current intention of Ausnet’s board is to “unanimously recommend that shareholders vote in favour of the proposal”.

The company said a “superior proposal” was not out of the question should another party become interested in Ausnet’s assets.

Considering Brookfield’s size – it has US$626 billion in AUM – and aggressive deal-making style, it could be an interesting race if that were to happen.

Investors appear to have bought on the news today, pushing the Ausnet share price higher.

Ausnet shares are now exchanging hands at $2.34 apiece, up 18% from the market open.

Ausnet share price snapshot

The Ausnet share price has had a challenging year to date, posting a return of 13% since January 1.

It has faced headwinds over the past 12 months too, having climbed just 6.5% over this time.

These returns have lagged the S&P/ASX 200 index (ASX: XJO)’s gain of around 25% over the past year.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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