AGL has offered 0.564 AGL shares for each Alinta share, which is a similar ratio to Alinta’s initial proposal of 1.773 Alinta shares for each AGL share.
AGL chairman Mark Johnson said after the completion of its off-market bid, the company plans to demerge the combined AGL/Alinta energy and infrastructure businesses. He said the company expects the new demerged energy and infrastructure business will have less competition issues and will be one of the top 50 companies on the ASX.
“There is a compelling case for the two businesses to combine, particularly the infrastructure operations,” he said.
“Our offer is an interim step to a demerger of the expanded infrastructure and energy businesses.
“It builds upon Alinta’s proposal and will achieve the best combination of board and management strengths.”
Johnson said the demerger proposal from Alinta was rejected because it would involve a takeover of AGL at a price below fair value.
“The combined energy business will draw on AGL’s skills and capabilities in the deregulated and highly competitive energy sector, allowing it to focus on its substantial growth potential without the dilution of focus that would occur in an energy business that is also an infrastructure fund manager,” he said.
AGL has now withdrawn its recommendation of its earlier demerger proposal and will ask the Federal Court to cancel its March 27 shareholders’ meeting.
If the bid is successful, AGL chief executive Paul Anthony will be appointed the CEO of the combined demerged energy businesses. The company will also request Alinta CEO Bob Browning be appointed CEO of the combined infrastructure businesses.
In addition, AGL said it will invite four members of Alinta’s board to form a combined interim board of 10 directors.
The offer is conditional upon AGL acquiring at least 90% of Alinta shares and no objections from the Australian Competition and Consumer Commission.
News of the alternative merger plans seemed to please the market, which saw share prices increase in both companies. At 9.30 (WST) this morning, AGL was up 21c to $18.64, while Alinta was trading up 30c at $10.68.