AGL Energy says it will buy Macquarie Generation for A$1.505 billion

SYDNEY Tue Feb 11, 2014 5:22pm EST

SYDNEY (Reuters) - AGL Energy Ltd AGK.AX has agreed a deal to buy the Australian state-owned power company Macquarie Generation for A$1.505 billion ($1.36 billion), the Australian gas and electricity retailer said on Wednesday.

AGL said the deal with the New South Wales government for the two coal-fired power stations is conditional on winning the approval of the Australian Competition and Consumer Commission, which last week warned that the deal could result in a "substantial lessening of competition".

AGL said it intends to fund the transaction by way of a renounceable rights issue.

The NSW government has said proceeds of the Macquarie Generation sale will go towards an A$11.5 billion motorway scheme to ease traffic congestion in Sydney's western suburbs. ($1 = 1.1072 Australian dollars)

(Reporting by Colin Packham)