Singapore Power Ltd. and Babcock & Brown Ltd. have decided to buy Alinta Ltd. for A$7.4 billion or $6 billion to acquire the assets of Australia’s biggest owner of gas pipelines and electricity networks. The cash and stock offer amounts to A$15 a share, representing 6 percent premium over the last closing price. Singapore Power and Babcock, Australia’s second-largest investment bank, whitewashed a competing bid by Macquarie Bank Ltd. The companies will also assume A$6.5 billion in debt.
The Perth-based company has said in a statement that the offer from Babcock, in partnership with utility Singapore Power, valued Alinta at A$15 per share. However, media reports have suggested that Macquarie’s offer of cash and shares in a new listed entity valued Alinta at more than A$15. Speaking on the issue, Alinta Chairman John Akehurst clarified in a statement that the two proposals received were compared against possible internal restructuring alternatives. And that led the board to conclude that the Babcock & Brown/Singapore Power consortium’s proposal was superior.
Moreover, earlier the Alinta board had rejected a $15.45 per share cash offer from Macquarie Bank for the West Australian energy utility which could have triumphed over Babcock & Brown/Singapore Power offer. Alinta was trying to persuade Macquarie to approach with an all cash offer for the company. Whereas, Macquarie maintained that the offer contain a default clause which would perceive Alinta shareholders become owners of a proposed listed vehicle along the lines of the former Alinta Infrastructure Holdings.
The Alinta board has apparently hesitated at the idea saying they were not confident that the vehicle would be a success and Macquarie’s bids contained complex arrangements shareholders would struggle to comprehend.
B&B Infrastructure will take over Alinta’s energy transmission and distribution assets and operations and maintenance businesses. In addition to it, B&B Power will acquire its 970 megawatt power generation portfolio and 67 per cent of its Western Australia retail assets.
