SYDNEY (Reuters) - Australian gas pipeline owner Envestra Ltd (>> Envestra Limited) backed a A$2.37 billion (1.3 billion pounds) cash takeover bid from firms linked to Hong Kong tycoon Li Ka-shing, a deal that would give Asia's richest man control of a lucrative infrastructure asset.

Envestra's move on Friday scraps previous support for a lower, share-swap offer from domestic rival Australian Pipeline Ltd (>> APA Group), which owns about a third of the target. The cash offer by Li and his Cheung Kong Group (CKI) (>> Cheung Kong Infrastructure Holdings Ltd.) is the latest in a string of deals to expand into regions offering higher growth and returns than their Hong Kong base.

In a statement to the Australian Securities Exchange, Envestra said its chairman and an independent board committee now unanimously recommended the CKI offer and would withdraw their support for the APA all-stock offer, worth about A$2.20 billion.

Envestra had recommended APA's bid for about two months but companies related to CKI - Envestra's biggest shareholder after APA - opposed the move before unexpectedly submitting a higher cash offer on May 9.

"We will consider our options," an APA spokesman said.

Analysts said that the CKI offer gives APA the chance to sell its Envestra stake at a substantial profit.

"APA can't be too unhappy with this because they bought this Envestra stake pretty cheaply," said Morningstar analyst Adrian Atkins, adding APA bought many of its Envestra shares in a 30-cent rights issue, compared to CKI's cash offer of A$1.32 per share.

APA would struggle to block the CKI bid since, even though it has a third of Envestra's shares, CKI's offer is conditional only on getting 50 percent approval. A higher offer from APA would likely be blocked by CKI.

An acquisition by the Hong Kong group would be a welcome victory for CKI after it missed out on another prized Australian asset, the world's biggest coal terminal, Port of Newcastle, a month ago. The government of New South Wales state sold the asset to China Merchants Group Ltd [CNMGP.UL] for A$1.75 billion.

Envestra shares were up one percent at A$1.367 and APA shares were up 0.5 percent at A$6.925 02.02 GMT. Australian stocks were broadly flat.

(Reporting by Byron Kaye; Editing by Stephen Coates and Kenneth Maxwell)

By Byron Kaye