The utilities group was the only ASX sector to rise in yesterday’s nasty 132 point sell-off. It edged up just 0.7 of a point thanks to a Bloomberg report that Singapore Power and Babcock and Brown were combining to launch a joint bid for Alinta.
That sent Alinta shares racing ahead 64c to $14.75.
The shares of a possible local suitor, AGL Energy, shed 61c to $15.00. Babcock and Brown shares eased 4c to $25.32 AGL remains more interested in Origin which fell 15c to $9.05.
Bloomberg reported:
“Singapore Power Ltd. plans to join Babcock & Brown Ltd. in a A$9 billion ($7 billion) bid for Alinta Ltd., Australia’s biggest energy transmission company, said three people familiar with the transaction.
“Singapore Power and Sydney-based Babcock may submit their offer for Perth-based Alinta on March 12, said the people, asking not to be identified before an official announcement. Banks were invited to lend state-run Singapore Power’s half of the bid amount, they said. Babcock will get loans for its portion in Australia.
“Singapore Power and Babcock would get gas pipelines and power grids across Australia, Asia Pacific’s fifth-biggest economy, as a commodities-led boom increases energy demand. Alinta invited bids in January after getting a proposal for a management buyout. The Singapore-Babcock bid, worth about A$18.23 a share, would be 29 percent above Alinta’s close on March 2.”
Last night Babcock and Brown squelched the Bloomberg report:
“While [B&B] does not normally comment on media speculation, it wishes to keep the market properly informed and therefore advises that a Bloomberg article issued today speculating on BNB’s involvement in a bid valuing Alinta at $9 billion, is without foundation.”
Alinta also released a statement last night after being queried by the ASX about the Bloomberg report.
“Alinta restates the advice it provided the market on February 28 that a number of expressions of interest have been received in relation to the possible sale of Alinta,” it said.
“A limited number of interested parties have been given access to a virtual data room to conduct due diligence on the company.
“Alinta reiterates that no binding bids have been received and there is no certainty that any will be received.”
Alinta has put itself on the market after a management buyout involving the CEO, senior managers and the then chairman was ‘sprung’ and criticised heavily.
Not helping the situation was the confused role of the company’s long time financial adviser, Macquarie Bank which wanted to get into bed with the management buyout group.
It has been trying to drum up bids for the past month or so and Babcock and Brown has been a long tipped possible buyer. It is believed to hold just around four per cent of Alinta’s shares.
Alinta is still trying to bed down the results of the audacious $6 billion asset and debt swap with AGL in October last year.
Alinta chairman, John Akehurst said last week that the sale process had resulted in a number of expressions of interest, and that a small number of groups were doing due diligence on Alinta’s accounts.
The team of the former management group and Macquarie Bank are believed to be doing due diligence.
Alinta will split itself into two companies later this year if this sale process doesn’t work.
Alinta owns the Eastern Gas Pipeline that runs from Victoria State to Sydney, a stake in the Dampier to Bunbury pipeline in WA, six power plants in New Zealand, Tasmania, Victoria and Western Australia. And it has a wholesaling business in the eastern Australian states and around 530,000 gas and electricity customers in WA (its old home base).
The first fruits of the AGL deal last October appeared in the 2006 results from the company, released last week.
Alinta said interim earnings reached $172.7 million for the year to December 31.
The company said this reflected a “37% increase in profit from underlying operating activities from $102 million in 2005 to $140 million for 2006.
“The net profit figure for 2005 of $232.2 million included $137.8 million resulting from the operation and sale of the former Duke assets into Alinta Infrastructure Holdings.”
Alinta’s Acting CEO, Mr Peter Magarry said: “These results show very strong operational performance within Alinta during a year in which we have also undertaken significant corporate activity.
“Alinta has a high quality portfolio of businesses and assets producing attractive returns. The underlying business that we have owned throughout the year grew by 37% over last year.
“Key elements of the result are the excellent underlying operational performance and the good progress with the integration of the AGL infrastructure assets and asset management business we acquired in October 2006. I’m very pleased to say both are performing ahead of our expectations.
“We remain confident we will achieve the $70 million in annual cost savings from the AGL integration in a timely manner. The current forecast represents an upgrade from the original Scheme Booklet estimate of $55 million.”
