Macquarie may trump Babcock-SingPower bid

The Straits Times, May 5, 2007


SYDNEY - INVESTMENT firm Macquarie Bank may improve its A$7.6 billion (S$9.55 billion) offer to buy energy infrastructure firm Alinta, challenging a rival board-endorsed bid led by Babcock & Brown and Singapore Power (SingPower).

The Australian media reported yesterday that Macquarie was close to submitting a revised all-cash offer of A$15.45 a share for Alinta, which would overcome uncertainty about the value of an initial cash-and-scrip offer.

Macquarie said in a statement that a proposal to acquire all of Alinta remained under consideration.

Its first bid of A$15.45 a share for Alinta was beaten in March by Babcock and SingPower's lower A$7.4 billion cash and stock proposal, because of the Alinta board's reservations about the value of Macquarie's offer of shares in a new company.

'If Macquarie makes an A$15.45 all-cash offer, it would be unlikely that Babcock would return with an even higher bid simply because the numbers we're looking at now are very very full,' said Mr David Le Carpentier, an analyst at Credit Suisse Bank.

'The A$15.45 all-cash offer should also satisfy Alinta's shareholders, who are mostly hedge fund investors.'

SingPower already owns 51 per cent of Australia's SP AusNet, an energy network operator.

The tussle for Alinta, Australia's largest energy infrastructure firm, came on the heels of a flurry of takeovers in the sector and has sent Alinta's shares surging 36.7 per cent since the start of the year.

Separately, Macquarie said it has entered a conditional agreement with energy retailer AGL Energy, under which AGL would acquire the 67 per cent of AlintaAGL it does not already own.

AlintaAGL, which was spun off in an asset swop deal between AGL and Alinta last October, is a joint venture company that holds Alinta's Western Australia retail and generation businesses.

Under the agreement with AGL, Macquarie would sell to AGL the AlintaAGL power retailing business that AGL does not already own. This would be in exchange for AGL agreeing to sell to Macquarie its interests in several Alinta generators, according to newspaper reports.

Macquarie may be planning to use the proceeds of any AGL deal, which could be about A$400 million, to fund a cash return to Alinta shareholders as part of a sweetened offer.

Shares of Alinta, which put itself up for sale after receiving a management buyout proposal in January, closed 0.7 per cent higher at A$15.25 yesterday.

Perth-based Alinta, listed in 2000 as a gas distributor and retailer, has seen its market capitalisation jump 20-fold to about A$7.6 billion.

Babcock and SingPower's offer, which was initially valued at around A$15 a share, included A$8.50 in cash and shares in Babcock's infrastructure, power and wind funds, as well as 1.51 Australia Pipeline Trust units for every five Alinta shares.

The value of the offer has since increased to A$15.88 a share, largely because of a rise in the value of the Babcock funds, Babcock said on Wednesday.

In a bid to sweeten the deal, Babcock said on April 16 that it would offer shareholders with 1,000 Alinta shares or less the opportunity to receive all cash.

REUTERS