Expect A Higher Bid For GasNet, But From Whom?

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Analysts at UBS and Macquarie both agree that an increased bid for GasNet (GAS) is likely, given Babcock & Brown’s (BBI) and Australian Pipeline Trust’s (APA) "opportunistic" move, but the big question is from whom?

Both brokers concur that given GasNet’s fall from the ASX200, and the subsequent drop in share price, the joint venture partners may be looking to take advantage of the lower share price, but that some major shareholders may put a spanner in the works and hold out for a larger bid.

Macquarie is of the opinion that the GasNet board will "find it difficult" to recommend the bid given its small premium.

Although the broker doubts another bidder will come in at this stage, the view is that the current offer will need to be sweetened.

UBS agrees, but doubts if Babcock & Brown "could easily justify a higher bid". The broker believes APA could do so, and may thus end up going it alone.

Both brokers are Neutral on the stock. Macquarie has a target of $2.25 and UBS of $2.35.

By Terry Hughes

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