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AGL and Alinta come to the table

AGL and Alinta come to the table

Lawyers advising Alinta and AGL on their recent merger proposals and takeover bids could have been forgiven at certain points for not knowing if they were coming or going. The cross bids that…

Lawyers advising Alinta and AGL on their recent merger proposals and takeover bids could have been forgiven at certain points for not knowing if they were coming or going. The cross bids that formed one element of the transaction meant the lawyers for both parties were preparing bidder and target statements at the same time.

Alinta was advised by Blake Dawson Waldron, led by Marie McDonald, and AGL by Gilbert + Tobin, led by Gary Lawler and Philip Breden.

The hostile bid, which was launched by Alinta in February, with a $1.8 billion market raid to gain control of 19 per cent of AGL, came to an amicable end last week with the signing of a binding heads of agreement to merge the companies’ respective infrastructure businesses.

AGL’s energy business will be wholly owned by the existing AGL shareholders and will consist of AGL’s current energy assets as well as a 33 per cent interest in Alinta’s Western Australia retail and cogeneration business for $367 million. AGL’s energy business has the right to acquire the remaining 67 per cent over a five year period.

The enlarged Alinta will be 55 per cent owned by Alinta’s current shareholders and 45 per cent by former AGL shareholders. Alinta will acquire AGL’s infrastructure assets and asset management business (Agility) for $6.45 billion.

McDonald said the firm had been working with Alinta over a year, advising on a possible merger of the two companies. Their plans were thwarted by AGL’s announcement that it was going to demerge its infrastructure and energy businesses, which prompted the market raid and prevented AGL from following through on its plans.

“It was unusual to have a market raid like that, and it was probably the biggest market raid in Australia’s history. That changed the dynamics because AGL could not go ahead with the demerger,” McDonald said. Alinta then proposed a merger of the two companies followed by a demerger into separate energy and infrastructure businesses, but this was rejected by AGL, which made its own takeover bid for Alinta.

McDonald believes this transaction was the first in Australia to feature two cross bids. She says the deal featured a number of difficult legal issues, as well as complicated processes, such as having two teams of lawyers simultaneously preparing bidder and target statements. “It is certainly a very interesting deal and there were those novel issues that no-one has had to grapple with before.

McDonald said Blakes’ team worked closely with Alinta’s general counsel, Murray King, on the matter.

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