UPDATE 2-Leighton pulls out of Alinta bid group - sources
(Adds shares, source/analyst comments)
SYDNEY, March 21 (Reuters) - Engineering contractor Leighton Holdings Ltd. (LEI.AX) has pulled out of a Macquarie Bank-led consortium preparing a bid for Australian energy infrastructure group Alinta Ltd. AAN.AX, sources familiar with the situation said on Wednesday.
Leighton shares rose 4.7 percent following the news, while Alinta, which has a market capitalisation of about A$7 billion
($5.6 billion), fell 1.8 percent in a slightly weaker broader market .AXJO.
The Macquarie MBL.AX group, one of three taking a look at Alinta, was restructuring its proposal ahead of a deadline for final bids, the sources told Reuters, confirming a report in the Australian Financial Review newspaper.
Leighton was not immediately available to comment.
Analysts said that while there was no doubt Alinta had attractive assets, it would be difficult for the various interested parties to agree on a price tag for the company.
"The asset management arm is a very profitable business...but there are concerns that the regulator would start to crack down on that business, so that's making some investors like Leighton cautious," said an analyst who declined to be identified. Final bids for Alinta are expected by the end of this week or early next week, the sources said, adding Alinta's board was expected to make a quick decision on the winning bid.
"Given there is a shortage of infrastructure business available for sale, its competitors would definitely be keen to grab what they can. But I think the interested parties are also realistic about prices," said Natalie Kelly, an analyst at Commsec Ltd.
Alinta owns a number of gas-fired power stations and gas transmission pipelines. It also owns an asset management business which operates and maintains all the distribution and transmission assets.
The Macquarie consortium, which sources said also included Dutch bank ABN AMRO AAH.AS and infrastructure maintenance firm Transfield Services (TSE.AX), is being advised by former Alinta executives who led the original buyout proposal.
Former Chief Executive Bob Browning said on Friday he would no longer be involved in the consortium after moving to the United States by mid-July.
Another source said the loss of Leighton, which has never publicly confirmed it was involved, was unlikely to dent Macquarie's bidding power. "Nobody in this market underestimates Macquarie," the source said. Perth-based Alinta put itself up for sale in January after receiving a controversial management buy-out proposal.
Australian investment bank Babcock & Brown Ltd. BNB.AX in partnership with Singapore Power; and U.S. investment bank Goldman Sachs (GS.N) with Hong Kong's Cheung Kong Infrastructure Holdings Ltd (CKI) (1038.HK) were also conducting due diligence, sources have told Reuters.
CKI has agreed to sell half its stake in a Sydney road tunnel to Macquarie Bank, sources told Reuters on Tuesday, freeing up cash for an Alinta deal.
Perth-based conglomerate Wesfarmers Ltd. (WES.AX) was also expected to take a look at Alinta although it was not clear whether it would bid, local media reports and sources have said.
($1=A$1.24)
(Additional reporting by Fayen Wong)
((Reporting by Michael Smith and James Thornhill, editing by Kim Coghill; michael.j.smith@reuters.com; Reuters Messaging: michael.j.smith@reuters.net; +61-2 9373-1821)) Keywords: ALINTA BID/
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