Australia’s second oldest listed company, AGL, has taken the battle
to its five year old predator Alinta by launching a counter-takeover this
morning. AGL has dumped its own demerger plan, which has cost tens of
millions already, and instead wants to buy Alinta and then do its own
demerger of the combined business.

AGL chairman Mark Johnson has today acknowledged the “compelling”
case of putting the two infrastructure businesses together, so now it
comes down to a beauty parade over which management team is best suited
to do the job.

AGL should easily win any test of financial strength because it is
three times the size of Alinta, but its David-like predator has snapped
up a 19.9% stake and is now AGL’s largest shareholder after
spending $1.8 billion on the market at $19.50 a share.

AGL shares rose 20c to $18.63 this morning while Alinta gained 23c to $10.65. AGL is offering 0.564 of its own shares for each
Alinta share, which is a similar ratio to Alinta’s initial proposal
of 1.773 of its shares for each AGL share.

This sudden change of tack makes AGL’s telemarketing campaign last week seem a little odd, as an AGL shareholder explains:

I just got a phone call from AGL – it was a
recorded message from chairman and Macquarie Bank co-founder Mark Johnson about the Alinta takeover bid.

He opened up by saying AGL have their de-merger proposal on the table
which they believe is in the best interests of shareholders, and now
Alinta (he failed to point out they were advised by his department at
Macquarie Bank), has come along with a proposal which is “complex and

The thrust of the message was that shareholders
should sit tight for the time being, and he’ll be writing to us
shortly. Last week, a real live human left a message on my
answering machine on behalf of AGL and the woman was pushing similar lines.

Takeover battles aren’t what they used to

Indeed, I can’t remember the last time two companies went hostile at
each on the basis that a merger makes sense but agreement can’t be
reached on who’d run the show and the fine detail of the structure.