Takeover target Hastings Diversified Utilities Fund (HDF) says it will consider an increased offer from pipeline operator APA Group.
Hastings, which invests in energy infrastructure, is the subject of two takeover offers - a cash-and-scrip offer from APA and an all-cash offer from Pipeline Partners Australia (PPA).
APA on Thursday stepped up the takeover battle by increasing its offer after being granted access to Hastings' accounts earlier this week.
APA's previous offer had an implied value of $2.00 per HDF security, and its new offer now values Hastings shares at $2.51, based on the most recent closing price of its shares before the offer was raised.
PPA has offered $2.325 per HDF security.
"APA's offer is clearly superior to the Pipeline Partners Australia offer for HDF," APA chairman Len Bleasel said in a statement.
"It is now significantly higher and is less conditional.
"We look forward to our improved offer being formally recommended by the independent directors of HDF."
Hastings Funds Management Ltd (HFML), the responsible entity for HDF, said its independent directors would meet to consider the terms of the new APA offer.
HFML has already recommended that Hastings' securityholders accept the PPA offer in the absence of a superior bid.
If the APA offer is deemed superior by HFML's independent directors, PPA will have two days to make a matching or better offer.
APA has also announced plans to raise $350 million to fund its takeover - if successful - through the issue of listed notes.
APA chief financial officer Peter Fredricson said the fund raising venture would broaden the company's funding options for its growth and investment opportunities.
"This includes organic growth investment in APA's pipelines and related infrastructure, in the order of $300 million each year, as well as the possible acquisition of the HDF assets if our takeover is successful," he said.
The notes are to be offered to shareholders over the coming month.
APA securities lost nine cents, or 1.86 per cent, to $4.76 and Hastings securities dropped one cent to $2.54.
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