After months of brawling and full-page
newspaper ads bagging each other and millions of dollars worth of advisers’
fees, AGL and Alinta management are currently in middle of
a cozy media conference in Goldman Sachs JB Were’s Sydney offices telling the
world how good they both are.

This morning the duelling duo announced
peace in their lunch time, with Alinta buying AGL’s infrastructure assets and AGL
buying Alinta’s WA retail and cogeneration business. Who’s the winner? Well,
everyone of course – according to the players.

AGL shareholders end up retaining 100% of their energy business while paying Alinta $367 million cash for a third
of the WA energy stuff with an option to buy the rest over five years. They’re swapping their
infrastructure and asset management business for a 46% stake in Alinta
Ltd. In theory, they’re getting $6.45 billion for the assets.

Interestingly, AGL is keeping its stake in
the proposed PNG-Australia gas pipeline.

Alinta’s acquisitive CEO Bob Browning gets
a bigger empire to run and AGL’s new CEO
Paul Anthony keeps something to run. Are the shareholders of either company
better off? Probably not.

The best that can be said is that the $6.45
billion is a full price for the AGL assets – as long as Alinta’s share price
holds up.

Peter Fray

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