Tycoons triumph in Australand, Envestra takeovers

Thai beer baron Charoen Sirivadhanabhakdi and Hong Kong tycoon Li Ka-shing both emerged victorious on Thursday as companies they controlled won takeover battles for Australian targets.

Singapore-listed property firm Frasers Centrepoint, which is controlled by Charoen, achieved acceptances for 56.8% of Australand, enough to make its offer unconditional.

Meanwhile, a Cheung Kong Infrastructure-led consortium’s bid for Australian gas distributor Envestra also became unconditional after rival APA group threw in the towel and tendered its entire 33% stake in Envestra, resulting in the consortium gathering acceptances of 72.8%.

Bidding wars or hostile takeovers are far more common in Australia than in Asia, where bankers have long lamented that many large Asian conglomerates are controlled by rich families who are reluctant to sell, which hinders takeovers.

Australia may be fertile hunting ground but a victory for Frasers Centrepoint was far from a forgone conclusion. As late as August 6, the day before the offer was due to lapse, only 28.6% of Australand shareholders had tendered their acceptances. This quickly rose to 46% of acceptances as of August 7, 2.30pm Australia time, but was still shy of the 50% that was needed to prevent the offer from lapsing.

Australand shares hit a 12-month high of A$4.61 on June 20, before easing to A$4.48 on August 7. Hedge funds bought heavily into the stock ahead of the offer closing. However, Frasers Centrepoint had told investors it would not sweeten its bid and that the offer would disappear if it did not receive more than 50% of the acceptances.

“The hedge funds own a lot of this, there is no reason why they should tender before today,” said one source familiar with the deal on Thursday ahead of closing. “They are buying for arbitrage but if the offer lapses they will lose money.”