AGL Energy Limited · ASX:AGL
AGL Energy — Merger or Acquisition (March 2006)
27 slides from AGL Energy's merger presentation, Mar 13, 2006
Slide 1: AGL Offer to Merge With Alinta
AGL Offer to Merge With Alinta Transforming Australia’s leading energy and infrastructure businesses 13 March 2006
Slide 2: Disclaimer
Disclaimer The information in this presentation: ¾ is not an offer or recommendation to purchase or subscribe for securities in The Australian Gas Light Company or to retain any securities currently held ¾ does not take into account the potential and current individual investment objectives or the f
Slide 3: Agenda
Agenda ¾ Overview ¾ AGL Offer to Merge With Alinta ¾ Transaction Mechanics ¾ AGL Performance ¾ Summary Questions 2
Slide 4: Overview
Overview ¾ The AGL board of directors has rejected the Alinta Proposal Effectively a takeover at substantially below fair value ¾ However, AGL agrees with Alinta that there is merit in combining the companies ¾ AGL is now proposing a true merger with Alinta by way of a formal takeover offer (“AGL
Slide 5: Analysis of Alinta Proposal
Analysis of Alinta Proposal AGL has taken a disciplined approach to the assessment of the Alinta Proposal In examining Alinta’s Proposal: ¾ AGL has engaged advisers and conducted an extensive analysis of Alinta’s Proposal ¾ The AGL Board has focussed on a number of threshold matters in assessing the
Slide 6: Conclusions
Conclusions Alinta Proposal substantially undervalues AGL for a change of control Board and management expertise in competitive energy markets is critical ¾ After due consideration, conclusions reached on the Alinta Proposal: • The value proposition offered by Alinta for AGL: Value - Substantially u
Slide 7: AGL Offer to Merge with Alinta
AGL Offer to Merge with Alinta
Slide 8: AGL's Offer to Merge With Alinta
AGL’s Offer to Merge With Alinta ¾ AGL has announced an offer to merge with Alinta by way of an off-market offer to Alinta shareholders ¾ Alinta shareholders are offered 0.564 AGL shares for each Alinta share (identical to Alinta Proposal) ¾ Exchange ratio seen as appropriate in a true merger transa
Slide 9: Corporate Governance – Proposed Board and CEOs
Corporate Governance – Proposed Board and CEOs Interim Governance ¾ Interim Board: Combined interim board of 10* non-executive directors 6 AGL; 4 Alinta, with two additional directors acting as alternates for the interim period pre-demerger (currently 7 plus 5) Chairman: Mark Johnson ¾ Interim c
Slide 10: Strategic rationale – Complementary businesses
Strategic rationale – Complementary businesses ¾ Transforming two of Australia’s leading independent energy and infrastructure companies ¾ Value accretive transaction to both AGL and Alinta shareholders through demerging into focussed Energy and Infrastructure companies ¾ Strong cash flows and the a
Slide 11: Combined Businesses
Combined Businesses ¾ Combined market capitalisation of $9.5 bn (closing trading prices on 10 March), assuming the cancellation of Alinta’s 19.9% in AGL Combined 2005 EBITDA of over $1bn Combined enterprise value of around $15bn ¾ AGL shareholders will have 70% of combined group: Alinta 30% ¾ Po
Slide 12: Demerged Business Model
Demerged Business Model ¾ Energy Model Management focussed on core business activities of energy trading, supply, retailing Facilitates valuation and performance transparency No cross shareholding with infrastructure ¾ Infrastructure Model Model will be flexible - capital structure options t
Slide 13: Significant cost savings and synergies: $120m+ targeted
Significant cost savings and synergies: $120m+ targeted ¾ AGL expecting cost savings and synergies in Energy, Infrastructure and corporate functions ¾ AGL will exceed Alinta’s retail saving estimate: $50-60m being targeted ¾ The combination of the infrastructure businesses of AGL and Alinta will cre
Slide 14: Forecast Distributions
Forecast Distributions Distributions ¾ AGL Offer will provide a proforma dividend from the combined businesses of at least 88.7 cents in 2007 financial year Distribution Policy ¾ Consistent with the policy outlined in Demerger Scheme Booklet ¾ Energy payout ratio post demerger ~ 60% of earnings ¾ In
Slide 15: Transaction Mechanisms
SIAGL Transaction Mechanisms
Slide 16: AGL Offer – Transaction Mechanics
AGL Offer – Transaction Mechanics Pre merger Post merger AGL AGL Alinta shareholders shareholders shareholders ~70% ~30% 100% AGL AGL 100% 100% 100% Alinta AGL Business AGL Business Business 15
Slide 17: Proposed Asset Allocation Post Demerger
Proposed Asset Allocation Post Demerger AGL Alinta shareholders shareholders ~70% ~30% Infrastructure Energy Gas Electricity Gas Contracted Related Asset Wholesale Wholesale Distribution Distribution Transmission Power Retail Investments Management Electricity Gas networks Networks Pipelines Generat
Slide 18: AGL Performance
SIAGL AGL Performance
Slide 19: AGL Delivery on Strategy 2004-2006
AGL Delivery on Strategy 2004-2006 Power generation Wholesale Gas Retail Formed Sydney CSM Joint Loy Yang A (32.5% investment) Venture Increase in dual fuel accounts Hallett Power Station expansion Acquired 10% interest in PNG to 1.1million oil and gas project fields (Kutubu & Gobe) Turn
Slide 20: AGL Shareholder Returns
AGL Shareholder Returns AGL Total Shareholder Returns 110% 90% 70% 50% 30% Impact of AGL demerger 10% announcement (10%) Dec-03 Mar-04 May-04 Aug-04 Nov-04 Feb-05 May-05 Aug-05 Nov-05 Feb-06 Source: IRESS S&P/ASX 200 AGL Alinta As AGL has progressively integrated its NEM operations, over the last tw
Slide 21: AGL Energy Strengths
AGL Energy Strengths ¾ #1 energy and dual fuel retailer in the National Electricity Market states ¾ Australia’s largest downstream competitive energy business ¾ Largest listed power generator with net equity generation of 1,700MW ¾ Progressive integration of diverse generation portfolio to reduce su
Slide 22: AGL Infrastructure/Agility Performance
AGL Infrastructure/Agility Performance ¾ Objective evidence shows AGL being amongst the most efficient in the industry. Agility is successfully winning third party business ¾ WorleyParsons independent review (September 2005) as part of Envestra’s SA gas network regulatory review “Clearly no two di
Slide 23: AGL is delivering growth projects across its business
AGL is delivering growth projects across its business 2006 2006 2007 2008 2009 2010 Wholesale Upstream PNG Gas Project Gas Sydney CSM project Hallett 95MW (SA) Hallett expansion 250MW and Bluff 45MW (SA) Wholesale Electricity Bogong 130MW and West Kiewa 12MW (Vic) Dollar 79MW and Macarthur 330MW (Vi
Slide 24: Summary
SIAGL Summary
Slide 25: Summary
Summary ¾ The Alinta Proposal has been rejected by the AGL Board It is a takeover presented as a merger, at substantially below fair value ¾ AGL Offer to effect a true merger between the parties: The proposal reflects the same relative valuations between AGL and Alinta as was proposed by Alinta
Slide 26: Questions
SIAGL Questions
Slide 27: Further Information / Contacts
Further Information / Contacts A full range of information on AGL including the scheme booklet, prior AGL annual reports, presentations, announcements and financial results is available from www.agl.com.au alternatively, contact Graeme Thompson Head of Investor Relations The Australian Gas Light Com