Hong Kong-based utilities giant Cheung Kong Infrastructure will push ahead with a $7.4 billion takeover of DUET Group after being given the nod of approval by the electricity and gas distribution network company's board.
As first revealed by Street Talk, the board decided in favour of recommending the offer after squeezing a $3.03 per share price out of CKI, up from a prior offer of $3 per share.
CKI, which is led by Hong Kong's richest man Li Ka-Shing, has been actively seeking to increase its Australian investments in recent years, paying $2.4 billion for the then-listed Envestra in 2014 and seeking to buy a 50.4 per cent stake in NSW's Ausgrid last year.
However its bid for Ausgrid was knocked back by Federal Treasurer Scott Morrison and the Foreign Investment Review Board.
The DUET portfolio includes a stake in Victorian electricity distribution network United Energy, gas distributor Multinet and WA's Dampier to Bunbury Pipeline.
CKI first made a $2.90 per share offer for DUET in November, which was increased to $3 a share in December.
"Following a period of non-exclusive due diligence, the consortium confirmed its offer of $3.00 per stapled security and subsequently agreed to the payment of a 3¢ special distribution by DUET," chairman Doug Halley said in a statement on Monday.
"DUET's boards consider that the total cash proceeds of $3.03 per stapled security, inclusive of a special distribution payment by DUET, fully recognise the value and future growth platform that our management team has created and the operating and financing synergies available to the consortium."
DUET shareholders will vote on the proposed acquisition at a meeting in April and it will also require approval by FIRB. It is expected to be completed by mid-May.
The cash price represents a 28.9 per cent premium to DUET's closing price prior to the initial announcement in early December of the $3.00 offer and a 27.5 per cent premium to the three-month volume weighted average price.
The $7.4 billion offer valued 13.1 times 2015-16 earnings, including debt.
More to come.
