26/04/2006 - 09:11

Alinta-AGL deal a win-win say analysts

26/04/2006 - 09:11

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Analysts believe the Alinta Ltd and the Australian Gas Light Company Ltd merger announced today signals a win-win scenario for both companies and their shareholders.

Alinta-AGL deal a win-win say analysts

Analysts believe the Alinta Ltd and the Australian Gas Light Company Ltd merger announced today signals a win-win scenario for both companies and their shareholders.

The rival utilities players this morning signed a binding agreement to merge their respective infrastructure businesses.

Pattersons analyst Robert Gee said the outcome was positive for both companies, and that they both got what they wanted.

"Bob Browning has always wanted the infrastructure assets, so this is a good result for Alinta," he told WA Business News.

"He will retain the management rights to the infrastructure business and use the next 18 months or so to restore the balance sheet, so he can pursue other utilities assets, locally and overseas."

Under the deal, AGL's energy business will remain wholly owned by AGL shareholders and it will assume an initial 33 per cent of Alinta's retail and co-generation business.

AGL will pay $367 million for the Alinta interest, and will have the right to acquire the remaining 67 per cent over a five year period.

Alinta will acquire AGL's infrastructure assets for $6.45 billion, and the enlarged Alinta will be 55 per cent owned by Alinta's shareholders and 45 per cent by former AGL shareholders.

The announcement of the deal brings to an end a struggle between the two companies, which has seen each launch a takeover bid for the other.

Analysts said that from a financial perspective, both companies appeared satisfied, and would look for improved performance over the next two years.

This should result in a positive outcome for shareholders.

From a corporate stand point, both managing directors retain their positions, as do the boards, which was a sticking point through the takeover process.

AGL chief executive Paul Anthony said the deal was a step forward for shareholders and the industry.

"These two sector leading companies will play an important role in the future of Australia's energy industry," he said.

Alina chief executive Bob Browning said the deal was a major step forward for Alinta.

"This transaction will catapult Alinta into the largest energy infrastructure utility and asset manager in the country, with the potential for strong organic growth," he said.


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