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2 April 2007 - Singapore Power and Babcock & Brown, the Australian finance and infrastructure group, are set to buy Alinta for A$7.4bn (US$6bn) after the Australian energy utility's board chose their offer ahead of a rival bid from Macquarie Bank, according to a London's Financial Times report.
The Financial Times report said that state-owned Singapore Power and Babcock, which will assume A$6.5bn of Alinta's debt, are planning to split the acquired assets.
The endorsement by Alinta's board follows a three-month takeover tussle, initially triggered by a controversial management buy-out plan that sparked a debate over possible conflicts of interest.
Macquarie stressed, however, that its offer had valued Alinta at A$15.45 a share, compared to the A$15 per share value of the winning cash-and-stock bid.
John Akehurst, chairman of Alinta, justified the decision to shun Macquarie's higher bid by insisting that Macquarie's complex offer included a more risky component in the form of an alternative stock vehicle for shareholders who did not take up the cash offer.
Mr Akehurst said Alinta had "worked hard" - albeit unsuccessfully - to convince Macquarie to drop that component of its offer. "The underlying factor is that we looked at the scrip (stock alternative) and felt there were some significant risks relating to its trading performance once it was listed," he said.
The tough bidding contest for Alinta comes amid a round of consolidation in the Australian energy sector as the country's commodities boom continues to spur greater demand for energy. AGL recently abandoned a planned A$14bn tie-up with Origin that would have created Australia's largest electricity and gas retailer after Origin rejected the terms of the proposed "merger of equals."
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