AusNet (ASX:AST) share price to rise after APA (ASX:APA) starts bidding war

A bidding war has started for AusNet…

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A graphic showing three hands holding red paddles with the word BID, indicating a bidding war for an ASX share company

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The AusNet Services Ltd (ASX: AST) share price was the best performer on the S&P/ASX 200 Index (ASX: XJO) on Monday.

The electricity distributor’s shares rocketed higher after it received a takeover approach from Brookfield Asset Management.

The good news for shareholders is that the AusNet share price is likely to be rising again on Tuesday after a second suitor tabled an offer.

What’s happening?

On Monday Brookfield Asset Management made a non-binding offer to acquire the company for $2.50 per share.

This was a 26% premium to AusNet’s closing price of $1.98 on Friday. AusNet decided to provide Brookfield with the opportunity to conduct exclusive due diligence.

In response to this, rival electricity distributor APA Group (ASX: APA) has tabled an offer of its own.

What offer has been made?

According to the release, APA has made a non-binding indicative proposal to acquire AusNet by way of a scheme of arrangement for $2.60 per share in cash and scrip.

The release notes that the proposal would bring together two high quality businesses. It would also create a listed flagship Australian company with the scale and capability to accelerate the $20 billion growth in electricity transmission infrastructure needed to support the decarbonisation of Australia’s economy.

APA advised that it has been circling for a few weeks. The company made its first confidential offer of $2.32 per share on 1 September. After which, it made AusNet aware last Thursday that it would be making an improved offer. In light of this, it was disappointed that AusNet granted Brookfield an eight-week period of exclusivity.

Nevertheless, APA’s CEO, Rob Wheals, appears optimistic that the combination of the two companies will be possible.

He commented: “Unlike many OECD countries, Australia lacks a locally owned and controlled energy utility with capabilities across critical energy infrastructure and with the size and strength to partner with government and the community to deliver the energy transition.”

“The combination of APA and AusNet is a unique opportunity to deliver that vision and retain a proudly Australian controlled combined group listed on the ASX,” the CEO added.

The APA share price is down 2.5% on the news.

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Motley Fool contributor James Mickleboro has no position 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 owns shares of and has recommended APA Group. 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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