[ET Net News Agency, 14 June 2018] A consortium made up of CKA (01113), CKI (01038) and
PAH (00006) or CKA on its own would acquire 100% of APA Group at A$11/share, a 33% premium
to the latest closing price (A$8.27/share)
Morgan Stanley said the proposed acquisition of APA is in line with CKA's stated
strategy of growing the recurring proportion of its total income; that proportion would
have been up more than 50% YoY in 2017 if APA had been included.
The research house said the offer price implies an EV/EBITDA multiple of 15x. Valuation
may be justified, given potential synergy creation and CKA's 2.6% cost of debt, which is
much lower than APA's 5.3%. Also, CKA/consortium is seeking to divest certain assets at
APA, which could improve IRR. (KL)