CKI would divest APA's West Australian pipelines if the deal were to receive Foreign Investment Review Board approvals.Credit:Jamie Brown
Liberal backbencher Jim Molan and cross bench senators Pauline Hanson andRex Patrick had called for the deal to be blocked on national security grounds.
The decision comes after technology company Huawei was alsoscrubbed out from building Australia's new 5G telecommunications network over security concerns due to its links to the Chinese government.
FIRB did approvethe CK Group's $7 billion purchase of energy infrastructure company Duet last year but in 2016 knocked back its bid for Ausgrid.
The rejection opens the way for a potential rival suitor with industry sources tipping IFM Investors together with North American pension fund OMERS (Ontario Municipal Employees Retirement System) and others.
"I struggle to see the justification of national security reasons behind it,"one analyst said.
"This looks like a political play and it would more likely pass if the decision was made after - instead of before - an election.
"We've seen a lot of Chinese interest in Australia and right now it's politically unpopular."
The analyst predicted APA's share price would take a blow after the decision.
with Kylar Loussikian