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SYDNEY - Alinta, Australia's biggest energy transmission company, received a management buyout proposal backed by Macquarie Bank in what would be the country's largest utility buyout.
Alinta shares surged as much as 14 per cent, their biggest ever gain, valuing the company at A$6.3 billion ($7.1 billion).
Macquarie, Australia's biggest investment bank, is advising the group and may take a stake in the buyout, Perth-based Alinta told the Australian Stock Exchange yesterday.
Australian mergers and acquisitions in energy and related industries amounted to A$53.4 billion last year, almost quadruple the value in 2005, according to data compiled by Bloomberg.
Utilities are attractive because energy companies are regulated in Australia and offer steady cash flows.
"Everyone's perceiving that there's reasonable upside in Alinta's earnings and valuation over the next year or so, and clearly that's also seen by management and Macquarie Bank," said Angus Gluskie, at White Funds Management in Sydney. "It's one of those classic deals where Macquarie can go in as a financier, as an adviser and as a participant."
Alinta's shares rose A$1.56 to A$12.77. It has hired boutique adviser Carnegie Wylie & Co and JPMorgan Chase to help it assess the offer.
The financing for the proposed transaction has yet to be finalised, though Alinta said equity financing could total more than A$1.25 billion. Alinta also said it was too early to say how much per share the buyout group would offer.
The buyout group is being led by Alinta chairman John Poynton and chief executive Bob Browning. Chris Indermaur , general manager of business development, Stephen Pearce, chief financial officer, and Murray King, Alinta's general counsel, are also part of the group. Poynton stood aside as chairman as the company's board considers the proposal, and with Browning won't participate in evaluating the offer, the statement said.
"The board will evaluate any proposal by the management buyout group or others but has given no commitment to advance the proposal," newly elected chairman John Akehurst said. There was "no assurance" that an offer would be accepted or put to a shareholder vote.
- BLOOMBERG
