* APA's sheer size raises foreign ownership concern
* Investors had doubts bid would be cleared
* APA shares last traded 14 pct below offer price (Adds treasurer comments, share price, context)
MELBOURNE, Nov 7 (Reuters) - Australia is poised to bar Hong Kong-based CK Group going ahead with a A$13 billion ($9.4 billion) takeover of the country's biggest gas pipeline company, APA Group APA.AX , based on a preliminary view that it would be against the national interest.
Treasurer Josh Frydenberg said on Wednesday he would make a final decision within two weeks, saying that his preliminary view "reflects the size and significance of APA Group".
"I have formed this view on the grounds that it would result in an undue concentration of foreign ownership by a single company group in our most significant gas transmission business," Frydenberg said in a statement.
CK Infrastructure Holdings 1038.HK , part of the empire founded by Hong Kong tycoon Li Ka-shing, is leading a consortium which offered A$11 a share for APA in what would be the third biggest takeover, including debt, of an Australian company, according to Refinitiv data.
APA's spokesman had no immediate comments. CK Infrastructure said in a statement it had noted the treasurer's comments.
The decision, based on advice from the Foreign Investment Review Board and the Critical Infrastructure Centre, comes even after the Australian Competition and Consumer Commission cleared the takeover in September but was not a total surprise. had doubts the Foreign Investment Review Board (FIRB) and the treasurer would allow the takeover amid concerns about gas supply and soaring energy prices, which have become hot political issues.
As a result, APA's shares have been trading well below the A$11 offer price. The stock last traded at A$9.51 ahead of the Treasurer's announcement.
FIRB had mixed views on the bid.
"The FIRB was unable to reach a unanimous recommendation, expressing its concerns about aggregation and the national interest implications of such a dominant foreign player in the gas and electricity sectors over the longer term," Frydenberg said.
He said the competition commission had not considered the question of concentration of foreign ownership.
CK Infrastructure, which had been confident of securing approval for its takeover of APA, already owns several power and gas network assets across Australia.
However, Frydenberg said the sheer size of APA, with 15,000 kilometres (9,320 miles) of pipelines, including 74 percent of pipelines in the most populous states of New South Wales and Victoria, raised concerns about foreign ownership.
Frydenberg, who until August was energy minister, said he was not opposed to CK Group or its subsidiaries.
"The Australian government welcomes CK Group's investments in Australia and its broader contribution to the Australian economy," he said.
Last year, CK Infrastructure received approval for a A$7.4 billion takeover of pipeline owner DUET Group. It has only been blocked on one previous deal, when it bid with China's State Grid for the nation's biggest electricity network Ausgrid in 2016.
Fairfax Media reported that acquisition was blocked as Ausgrid served an Australian spy facility.
Earlier this year, Australia banned China's Huawei Technologies Co Ltd from supplying equipment for a 5G mobile network citing national security risks, straining relations with Beijing. ($1 = 1.3797 Australian dollars)