By Robb M. Stewart

MELBOURNE, Australia--The proposed 2.37 billion Australian dollar (US$2.23 billion) takeover of Australian gas-transmission company Envestra Ltd. (ENV.AU) has hit a snag after the suitor, a consortium led by Hong Kong billionaire Li Ka-shing's Cheung Kong Infrastructure Holdings Ltd. (1038.HK), objected to Envestra's plans to pay its shareholders a dividend.

Envestra said in a regulatory filing Friday that the consortium was against the payout, despite both parties having mentioned in respective statements to their local stock exchanges on May 30 that the dividend was part of the takeover agreement.

Cheung Kong Infrastructure--which has banded together with two of Mr. Li's other companies, Cheung Kong Holdings (0001.HK) and Power Assets Holdings Ltd. (0006.HK)--gained the support of Envestra's board for its bid of A$1.32 per Envestra share, which trumped a rival offer from Australia's APA Group Ltd. (APA.AU).

The battle pits two of Envestra's biggest shareholders against each other for control of a company at the heart of Australia's growing appetite for natural gas. APA has a 33% stake in Envestra and manages its gas-distribution networks and pipelines under a long-term agreement, while Cheung Kong Infrastructure holds a more than 17% interest.

Envestra said that unless the consortium withdraws its objection, it may have to turn to Australia's Takeovers Panel to resolve the matter.

The Australian company intends to pay a final dividend of A$0.035 a share for the financial year through June, which would be on top of the A$1.32 being offered by the consortium.

Write to Robb M. Stewart at

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June 19, 2014 21:15 ET (01:15 GMT)

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