The Australian Gas Light Company - s.87B undertaking

On 16 June 2006, the ACCC issued a media release announcing that it has accepted section 87B undertakings offered by AGL pursuant to section 87B of the TPA in relation to AGL’s proposed acquisition of Alinta. Note that at the same time a Statement of Issues was released relating to Alinta's acquisition of AGL proposal and the AGL-Alinta MIA joint proposal.

The Undertakings provide that AGL will do the following:

• complete the proposed demerger in accordance with the structures and asset allocations as described in its submission (subject to AGL shareholder approval).  The demerger structure involves the structural separation of interests in the Eastern Gas Pipeline and the Moomba to Sydney Pipeline, as well as the structural separation of interests in the Parmelia Pipeline from the Dampier to Bunbury Gas Pipeline;
• ensure there are no cross-shareholdings between the proposed Infrastructure Co and Energy Co;
• constitute Infrastructure Co and Energy as separate listed entities on the ASX with separate Boards and management;
• put in place hold separate arrangements in relation to AGL’s interest in APA and Agility’s APA service contracts, from Alinta’s ownership and management interests in AIH and the DBNGP in the transition period between the merger and demerger

The Undertakings also provide that:

• in the event the demerger does not occur, AGL is to divest its interest in APT and associated Agility contracts. Detailed clauses set out the specifics of the divestment process. APT owns the Moomba to Sydney Pipeline and the Parmelia Pipeline.

Background

On 21 February 2006, Alinta announced to the ASX its proposal to merge with AGL via a shareholder scheme of arrangement. On 13 March 2006, AGL rejected Alinta’s merger offer and announced its intention to make its own takeover offer to acquire 100% of Alinta’s ordinary shares. On 20 March 2006, Alinta subsequently announced its intention to make a takeover offer for all ordinary shares in AGL.

On 26 April 2006, Alinta and AGL signed a Heads of Agreement to merge the two companies. The Merger Implementation Agreement (MIA) formalising the Heads of Agreement was subsequently executed on 1 June 2006.

Despite the signing of the MIA, AGL and Alinta both requested that the ACCC continue its assessment of their separate individual acquisition proposals.