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MELBOURNE - Babcock & Brown Infrastructure (BBI) has abandoned its quest to buy out US energy utility NorthWestern Energy after a local regulator refused to reconsider its offer.
The Montana state regulator had rejected BBI's original US$2.2 billion ($2.8 billion) bid amid concerns the power and gas utility's customers could face higher bills and poorer services.
A refreshed offer from the Australian investor, including a US$580 million sweetener to maintain and develop Northwestern's assets, was also knocked back by the regulator overnight.
"Accordingly, BBI has now given a notice to Northwestern terminating the merger agreement and affirms its current intention not to proceed with the acquisition of NorthWestern," the infrastructure fund said.
BBI's acting chief executive Jeff Kendrew said BBI was disappointed it was unable to convince the regulator of the merits of the acquisition and "the benefits it would have brought to Montana consumers".
Kendrew noted the proposed acquisition had already received six out of the seven required approvals.
The proposed deal has so far cost BBI A$20 million in costs but it had also arranged contingent swaps to hedge foreign exchange and interest rate risks in relation to the acquisition.
BBI's forecast results for the year to June 30 for its existing assets included a loss of A$83.1 million due mainly to the swaps. The infrastructure investor said it had now given notice to terminate the swaps and intended to resist any claim for payment.
BBI stapled securities were trading A3.5c lower at A$1.73.
- AAP
