The shareholders of DUET Group (ASX: DUE) have certainly had a great start to the week. The owner of regulated energy utility infrastructure businesses has seen its share price rise a whopping 18% to $2.77 in early trade after the company responded to media speculation and confirmed that it is the subject of a takeover offer.
Over the weekend the Australian Financial Review reported that Hong Kong's Cheung Kong Infrastructure (CKI) tabled a conditional and unsolicited offer of $3.00 per share for the company, valuing it at approximately $7.3 billion.
This morning the DUET board revealed that it is in the process of evaluating the proposal and advised shareholders to take no action. The board warned that at this stage there is no certainty that the proposal will go any further.
It is worth remembering that even if the proposal were accepted the deal would have to go through the Foreign Investment Review Board.
It isn't the first time that CKI has been interested in Australian utilities. Earlier this year the company attempted to acquire New South Wales-based electricity distributor Ausgrid. That $11 billion offer was rejected by Treasurer Scott Morrison over national security concerns.
But with its shares priced just 23 cents lower than the offer price, it appears investors are reasonably confident that the takeover will complete.
I wouldn't recommend buying its shares in hope of a better offer. This offer is a 27.6% premium to the last close price and I feel it is unlikely that anyone will better it.
I believe investors seeking exposure to the industry would be better off taking a closer look at AGL Energy Ltd (ASX: AGL) or the upcoming Alinta Energy IPO.
