At least Macquarie Bank will be looking on with glee. The board of Alinta, the Australian energy utility which rejected Macquarie’s offer earlier this month, on Tuesday came under fire from some of its shareholders for accepting the rival A$8bn ($6.5bn) takeover offer from Babcock and Brown and Singapore Power.
At a shareholders’ meeting, some investors urged the board to pursue its internal restructuring efforts or find a white knight that could derail the planned takeover by Babcock and Singapore Power. A big issue, according to the Sydney Morning Herald, is impending foreign ownership of the bulk of Alinta’s assets.
But John Akehurst, Alinta’s chairman, told shareholders Alinta as a standalone company would not generate as much value as the takeover offer that was now on the table.
Separately, Peter Hofbauer, Babcock’s global head of infrastructure, told the FT that hedge funds had reduced their holding in Alinta over the past week from about 15 per cent to 5 per cent, indicating that institutions expected the offer to succeed.
Mr Hofbauer said institutions had expressed “strong interest” in opting for the share alternative offered by the bidders, which would see investors acquiring equity in infrastructure funds managed by Babcock.
The takeover of Alinta has been marred by controversy and unexpected twists since January, when the company disclosed that its chief executive and chairman were preparing a management buy-out together with Macquarie, Alinta’s long-standing adviser.
The MBO attempt failed amid concerns over conflicts of interest and the contest then turned into a complex — and nasty — bidding battle between Babcock and Macquarie, which each led a consortium.
This month in Australia, hedge funds and other institutions played an instrumental role in the spectacular collapse of a A$11.1bn attempt to take over Qantas, the airline.
In the case of Alinta, however, support from retail investors could prove more pivotal as they own 50 per cent of the equity and the deal needs to be endorsed by 75 per cent of the voted shares.
Babcock and Singapore Power are offering investors four options, including a full cash option worth A$16.06 per share, but which will be capped at A$.4.47bn. Singapore is accounting for most of the cash and is due to receive 65 per cent of Alinta’s assets. Macquarie’s failed offer included the option of a cash offer of A$15.80 per share. Mr Akehurst yesterday said there had been no further contact with Macquarie.