The AusNet Services Ltd (ASX: AST) share price has dipped 4% into the red during afternoon trade on Wednesday.
AusNet shares have been on a wild ride over the last week after a bidding war started over the company and its assets.
Let's take a closer look.
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What led us to this point?
AusNet's share price has been on liftoff since a company announcement on Monday. Brookfield Asset Management made a non-binding offer to acquire the energy distributor for $2.50 per share.
At the time, the offer represented a 26% premium to AusNet's closing price from the previous Friday.
But then, electricity giant APA Group (ASX: APA) stepped into the ring. APA Group upped the ante by putting down a $2.60 per share offer to acquire AusNet.
However, AusNet had already entered into a period of exclusivity with Brookfield, meaning it can't consider APA's offer. AusNet must wait until the due diligence period of 8 weeks is done.
As The Motley Fool's James Mickleboro reported last week, there are "a couple of potential scenarios" that could arise before this time. One being that AusNet could accept the "lower, but binding offer" from Brookfield versus risking throwing it away in favour of the 10 cents/share gain.
Nonetheless, investors will have until November to observe the AusNet share price in preparation for Brookfield's assessment.
What are the experts saying?
One leading broker has weighed in on the debate and sees headwinds for both opponents involved with the deal.
Investment banking giant UBS doesn't see a rosy path for Brookfield from Australian regulators, should it proceed with the acquisition.
The broker understands that Brookfield will have a tough time convincing Australia's Foreign Investment Review Board (FIRB) to support its deal – even if it beats APA to the finish line.
It believes that Australia's Cyber and Infrastructure Security Centre "may consider" electricity transmission "one of the most critical types of infrastructure from a national security perspective." UBS sees this "potentially applying a very high bar" for FIRB approval.
With respect to APA's bid, it believes the energy rival may not have the backing to overturn Brookfield's offer.
The reason is because of Brookfield's own asset base, and how this can interlock with AusNet's energy assets.
It understands that Brookfield "could allow" AusNet's major shareholders, State Grid and Singapore Power – around 20% and 32.75% owners respectively – to "roll their equity into the new unlisted entity".
However it is "less confident of such ability" under APA's proposal, which "may weaken the shareholder appeal" of its offer.
And the AusNet share price…?
Either way, it appears that AusNet shares could be worth keeping an eye on in the coming months as more rolls out with this deal.
At the time of writing, the AusNet share price is trading 3.86% lower at $2.49 apiece.
