The giant Hong Kong-based investment and energy business CK Infrastructure has launched a $13-billion takeover of Australia's largest gas network operator APA.

Key points: CK Infrastructure has launched a conditional and unsolicited $13b takeover bid for Australia's biggest gas distributor APA

CK Infrastructure has launched a conditional and unsolicited $13b takeover bid for Australia's biggest gas distributor APA The company is part of CK Holdings which already owns the 2nd largest gas network as well as large electricity networks

The company is part of CK Holdings which already owns the 2nd largest gas network as well as large electricity networks Bid is conditional on approval from ACCC and FIRB

In a release to the ASX this morning, APA said it had received an unsolicited takeover proposal from CK Infrastructure of $11 a share, a 33 per cent premium to APA's price at its previous close.

The CK Infrastructure bid group includes linked businesses SK Asset Holdings and Power Asset Holdings, which are ultimately controlled by one of Asia's richest investors — Li Ka-shing, chairman of Cheung Kong Holdings.

CK Infrastructure already owns a big slice of Australian energy assets.

Through its CHEDHA holdings and an interest in Spark Infrastructure it has a controlling stake in Victoria's largest electricity businesses Citipower and Powercor, and South Australia's ETSA business.

Last year the Cheung Kong group showed its appetite for buying into Australia's energy sector with a $7.4 billion takeover of the DUET group which owned a collection of gas pipelines, powerlines and electricity generators.

It had earlier been knocked back in a joint bid with China's State Grid Corporation to buy the NSW electricity distributor, Ausgrid.

At the time Federal Treasurer Scott Morrison rejected the bid citing "national security concerns".

APA and CK Infrastructure pipeline duopoly

It also owns 19.3 per cent of Envestra, which runs 21,000 kilometres of gas pipelines serving around 1 million homes and business.

APA owns 15,000 kilometres of gas pipelines across Australia, with its network supplying 1.3 million homes and businesses, predominantly along the eastern seaboard.

APA and Envestra are by a long way the dominant two players in Australian gas distribution.

Putting them together would certainly prompt very sharp scrutiny from the Australian Competition and Consumer Commission, which has long held concerns about pricing in an industry that is largely a duopoly already, and only lightly regulated.

APA owns 15,000 km of gas pipelines supplying 1.3m homes and businesses. ( Source: APA )

Any takeover would also require approval from the Foreign Investment Review Board.

The consortium has already held preliminary discussions with the ACCC to get the deal over the line and has offered to divest APA's WA-based assets: the Goldfields Gas Pipeline, the Parmelia Gas Pipeline and the Mondarra Gas Storage facility.

"Based on the the indicative price of $11 cash per stapled security, the APA board considered it in the best interests of APA's security holders to engage further with the consortium," APA said in a statement.

Shares spike to record high

APA advised its shareholders to take no action at this stage.

APA chairman Michael Fraser said the board would evaluate the takeover proposal and update the market and shareholders as appropriate.

"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.

Investors welcomed the news, with shares jumping 22 per cent to a record high of $10.10 at midday (AEST).

However, the spike in trading fell well short of the indicative offer price, suggesting the market believes CK Investments will have a difficult task winning regulatory approval.