Shares in APA Group have soared after the Australian infrastructure giant received a $13 billion takeover proposal from a Chinese consortium led by global infrastructure player CK Infrastructure Holdings.
APA shares gained 21 per cent on Wednesday, hitting an all-time high of $10.01 by 1515 AEST, up $1.74.
The CKI-led consortium is offering $11 in cash for each APA stapled security - a 33 per cent premium to the APA's $8.27 closing price on Tuesday.
APA, which is one of Australia' 50 biggest listed companies, has opened its books for the consortium to conduct due diligence.
APA's assets include gas pipelines and storage, wind farms and the Darling Downs solar farm.
The company operates 15.000 kilometres of natural gas pipelines across mainland Australia, delivering half of Australia's natural gas usage.
APA chairman Michael Fraser said the APA board had made no recommendation on the Chinese consortium's proposal at this time but did believe it was in securityholders' interests to engage with the consortium.
"The board believes APA has a very attractive business and is well-positioned to continue delivering strong results and ongoing growth, irrespective of whether the proposal proceeds to an offer," Mr Fraser said.
The CKI-led proposal includes the divestment of several gas assets to allay any concerns by the competition watchdog.
A takeover would also be subject to Foreign Investment Review Board (FIRB) consent.
The consortium has already had talks with the FIRB and the Australian Competition and Consumer Commission about possible gas infrastructure divestments if a deal eventuates.
The proposed divestments would include APA's interests in the Goldfields and Parmelia gas pipelines and the Mondarra gas storage facility, all in Western Australia.
CK Infrastructure Holdings - controlled by Hong Kong tycoon Li Ka Shing and formerly known as Cheung Kong Infrastructure - has investments in energy, transport, water, waste management, waste-to-energy and household infrastructure across Hong Kong, China, the UK, Europe, Australia, New Zealand and North America.
CKI already owns assets in Australia, including Australian Gas Networks, Duet Group, and a 51 per cent stake in SA Power Networks.
CKI is listed on the Hong Kong share market, and had a market capitalisation of around $HK180 billion ($A30.3 billion) in December 2017.
Morningstar senior equities analyst Adrian Atkins said CKI was offering a very attractive price for APA Group.
CKI was blocked by the federal government in August, 2016, when it attempted to buy NSW energy network Ausgrid because Ausgrid was providing electricity and communications to government agencies, including security agencies.
Mr Atkins said such security concerns were not an issue in the APA case but given that APA and CKI both owned extensive energy networks, there may be concerns about one company owning such a large part of the national grid.
"I'm leaning towards the deal probably getting through with a few asset sales and other things to appease the ACCC," Mr Atkins said.
Mr Atkins said CKI was probably attracted to Australian infrastructure assets because of the good local legal system and regulatory processes.
CKI is also already familiar with the Australian market and sees Australia as a safe investment destination, he said.