Thu, Nov 08, 2018 - Page 1 News List

Australia set to nix CK’s pipeline bid on national security

Bloomberg

CK Group’s A$13 billion (US$9.48 billion) bid for gas pipeline operator APA Group was knocked back by Australia’s government on national security concerns, a decision that has the potential to further inflame diplomatic tensions with China.

“I have advised the consortium led by CK Asset Holdings Ltd (長江實業) of my preliminary view that its proposed acquisition of APA Group would be contrary to the national interest,” Australian Treasurer Josh Frydenberg said in a statement yesterday.

His view was based on concerns that it would lead to an undue concentration of foreign ownership by a single company group in one of the country’s most significant gas transmission businesses.

Frydenberg said that he would make a final decision within two weeks.

CK Group, which is headed by Hong Kong tycoon Victor Li (李澤鉅), noted in a statement the treasurer’s announcement.

APA declined to comment.

The decision scuppers what would have been the Hong Kong-based conglomerate’s biggest overseas deal, which would have given it control of pipelines that deliver about one-half of Australia’s gas.

Rising electricity prices and blackouts have made energy security a hot political issue in the nation and an overseas acquisition of critical infrastructure would have been sensitive for Australian Prime Minister Scott Morrison’s government.

“My preliminary view is not an adverse reflection on CK Group or the individual companies,” Frydenberg said in the statement.

CK Group companies are already a substantial investor in Australia’s gas and electricity sectors, and the government “welcomes CK Group’s investments in Australia and its broader contribution to the Australian economy,” he added.

Morrison, who served as treasurer before replacing former prime minister Malcolm Turnbull in August, has blocked several deals involving China-linked companies in the past three years. Australia has a lot to lose should relations with its biggest trading partner deteriorate further.

Wine companies complained earlier this year that the frayed ties had caused shipments to be delayed at Chinese ports.

The timing of Frydenberg’s announcement could prove awkward for Australian Minister for Foreign Affairs Marise Payne, who is due to hold talks today in Beijing with Chinese Minister of Foreign Affairs Wang Yi (王毅).

Payne’s visit, the first by an Australian foreign minister to China in almost three years, was seen as marking a potential thaw in tensions in the relationship.

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