November 8, 2018 / 12:21 AM / 8 months ago

UPDATE 1-Australia's APA slumps as govt opposes HK gas pipeline buyout

* Australia’s treasurer blocks CK Group buyout of APA

* Move seen partly to prevent Chinese ownership of gas assets

* APA shares fall 11 pct to 5-month low (Adds analyst quote and background)

SYDNEY, Nov 8 (Reuters) - Shares in Australia’s biggest gas pipeline company APA Group fell 11 percent on Thursday after Australia’s treasurer said he intended to block a A$13 billion ($9.5 billion) buyout by Hong Kong’s CK Group.

Treasurer Josh Frydenberg said after market hours on Wednesday that his preliminary view was that the takeover was against the national interest because it would create a concentration of foreign ownership in the sector.

Frydenbeg said the move was not a reflection on CK Infrastructure Holdings Ltd, part of the empire founded by Hong Kong tycoon Li Ka-shing. Analysts said the move appeared to be partly aimed at preventing Chinese ownership of a strategic asset.

“I don’t think its just the China element, but a combination of important assets, concentration of ownership and China,” said Morningstar analyst Adrian Atkins.

“I think the Chinese element maybe had a bit more of an impact than the treasurer’s letting on ... it’d probably be unpopular with the electorate to have a major asset go to a Chinese firm,” he said.

The rebuff is likely to test an already strained relationship between Australia and its largest trading partner, just as Australia’s foreign minister makes a delayed visit to Beijing.

Earlier this year, Australia banned China’s Huawei Technologies Co Ltd from supplying equipment for a 5G mobile network citing national security risks, while Canberra last year accused Beijing of meddling in domestic affairs.

APA Group shares, which had never traded at the A$11 offer price, fell back to pre-bid levels at A$8.48, an almost five-month low, wiping A$1.2 billion off its market value. The broader market opened higher.

APA said it noted the treasurer’s decision and would update shareholders in due course. CK Infrastructure said in a statement on Wednesday that it had noted the treasurer’s comments. ($1 = 1.3746 Australian dollars) (Reporting by Tom Westbrook; editing by Richard Pullin)

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