The AusNet Services Ltd (ASX: AST) share price is on the move today after the company received a $2.65 binding proposal from Brookfield Asset Management.
Currently, the AusNet share price is up 5.26% to $2.60.
Brookfield is officially on the record
After a barrage of non-binding offers from Brookfield and APA Group (ASX: APA), the AusNet board finally has a binding offer on the table.
Subsequently, AusNet has entered into a scheme of arrangement with the consortium led by Brookfield.
Other partners include Canadian investment funds Alberta Investment Management Corporation, Investment Management Corporation of Ontario and Healthcare of Ontario Pension Plan, in addition to Australian based Sunsuper.
The scheme values AusNet at an equity value of $10.2 billion and an enterprise value of $17.8 billion.
AusNet shareholders will receive $2.65 in cash, a 34% premium to the AusNet share price before Brookfield and APA started its bidding war.
Door closing but not shut
As a result of the binding offer, AusNet has ceased due diligence with APA Group.
The $2.65 cash offer by Brookfield is an 11 cent premium of APA’s last $2.54 offer.
“APA is free to make a superior proposal and the SID has a customary fiduciary out which allows the AusNet Board to consider that further proposal”
Should the AusNet board recommend a superior proposal by APA or another bidder, AusNet would be required to pay Brookfield a breakage fee of over $101 million.
AusNet noted in its announcement that APA “did not indicate that it would be able to offer a full cash alternative or the value level at which any improvement to its indicative proposal could be made”.
The AusNet board will unanimously recommend the proposal to shareholders subject to no superior offer and an independent expert concluding the offer is in the best interest of shareholders.
Shareholders will be able to vote on the proposal, which is proposed to be held in March 2022.
The majority shareholder, Singapore Power which owns 32.74% of AusNet, will vote in favour of the proposal and preference is an all-cash consideration.
What’s next for the AusNet share price?
Brookfield has landed a knockout punch with a superior binding offer.
However, the consortium will still have several hoops to jump through before the deal goes through.
Foreign Investment Review Board approval will be required, in addition to shareholder and court support.
APA may be licking its wounds, but I wouldn’t be surprised to see them lob another bid. The company has demonstrated previously it’s not going down without a fight.
As for the AusNet share price, expect it to hover marginally below the $2.65 offer for the time being.
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