APA told the market this morning it would outbid Brookfield's A$2.50 per share bid, offering A$2.60ps to create Australia's largest transmission and distribution infrastructure utility with total assets of $29 billion.
The company said it approached AusNet with a confidential, non-binding proposal to acquire it via a scheme of arrangement at the beginning of September, originally offering A$2.32ps.
The pair had discussed the transaction, and APA had said it had told AusNet last week it would make a revised proposal.
APA said it canvassed AusNet's major shareholders, saying Singapore Power was generally supportive of the offer.
Now APA has been forced to up the ante, after Brookfield placed a higher offer on AusNet yesterday, with AusNet announcing it had entered into an exclusivity agreement so that Brookfield can conduct due diligence.
"APA is disappointed AusNet has purported to enter into a period exclusivity with Brookfield for effectively eight weeks, notwithstanding AustNet's knowledge of the pending revised and potentially superior proposal from APA," the company said.
APA has touted its offer as the superior proposal, offering a higher price, as well as allowing ASX shareholders to invest in AusNet via APA securities and participate in the benefits of the combined business.
It also noted it would not be subject to the approval of the Foreign Investment Review Board, unlike Brookfield's offer - coming from a foreign entity.
APA emphasised its deal would allow key electricity transmission infrastructure to remain in Australian hands, with the combined entity to have greater liquidity and free float, ranking it in the top 40 ASX companies by market capitalisation.
Referring to the overseas consortium currently pursuing a takeover of Spark Infrastructure Group, APA said if the Brookside offer was accepted it would mean all electricity transmission infrastructure in NSW and Victoria would be foreign controlled in private unlisted vehicles and all Victorian electricity distribution and gas distribution assets would be foreign controlled.
APA said that bringing the two entities together would create a flagship Australian company with the scale and capability to accelerate the $20 billion growth in electricity transmission infrastructure needed to support the decarbonisation of the nation's economy.
"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," APA managing director and CEO Rob Wheals said.
"The combination of APA and Aust Net is a unique opportunity to deliver that vision and retain a proudly Australian controlled combined group listed on the ASX."
APA said it plans to fund the deal using existing cash and debt facilities on hand, new bridging facilities and an equity raising of about $1.5 billion.
It said AusNet has one week to grant it due diligence access.
APA is being advised by Aquasia, Goldman Sachs, JP Morgan, and Macquarie as financial advisers and King & Wood Mallesons as legal advisors.
AusNet is currently in a trading halt after its share price rose 19% yesterday. APA shares are down 3.6% at $8.56.
