The deal will amount to HK$43.4b.
According to Maybank Kim Eng, Cheung Kong Infrastructure announced to form a consortium with Cheung Kong Properties and Power Assets to acquire DUET at a consideration of AUD3 (HK$17.6) per share, totaling AUD7.4b (HK$43.4b) in cash. The consortium of CKP, CKI and PA will be at a proportion of 40%:40%:20%, respectively.
Here's more from Maybank Kim Eng:
DUET shareholders will also get an AUD0.03/share special dividend. We think the acquisition is largely in line with the market news in Dec 2016. The deal will be subject to shareholders and government approval.
Synergies to be gained from Australian assets
CKI prefers projects in developed markets with lower regulatory and political risks, such as the UK and Australia. We believe this is sensible as CKI has successfully made acquisitions in Australia, and this one in particular, meets its criteria for one with stable and predictable cash flows.
CKI has a track record in Australian gas and power distribution, and we expect the first synergy will come from cost savings in administration, labour and management. We think our calculated acquisition P/B (as end FY16) of 2.1x looks fair and we expect CKI/the consortium to improve DUET’s ROE to 10% from 8% (the consensus estimate for FY17E).
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