Alinta, Australia's largest energy infrastructure firm, said it had recommended an improved offer from investment bank Babcock & Brown worth up to A$8.14 billion (US$6.74 billion), scuttling Macquarie Bank's rival bid.
Perth-based Alinta said in a statement that Babcock had raised its offer to A$16.06 per Alinta share, adding it was worth A$1.00 per share more than the initial board-endorsed proposal on March 30, taking into account the price increase in Babcock & Brown's fund securities.
Including potential tax credits on dividends to eligible shareholders of A$0.40 per share, Babcock's revised deal was valued at A$16.46 a share, Alinta said.
"The Babcock and Singapore Power Offer delivers outstanding shareholder value, choice for all shareholder groups and a high degree of completion certainty," Alinta Chairman John Akehurst said in a statement.
Under the revised deal, Alinta shareholders would be given the option of taking the maximum cash available or the maximum number of securities available, taking all preference shares, or taking a mixture of cash and scrip.
Alinta said Babcock's maximum cash option was subject to an overall cap of A$4.47 billion and the maximum scrip alternative to a cap of A$2.13 billion. The default cash-and-scrip option includes A$8.925 cash and scrip in three of Babcock infrastructure funds.
An initial A$7.4 billion offer from Babcock, which has teamed up with state-owned utility Singapore Power, had valued Alinta at around A$15 a share, including A$8.50 in cash, and shares in Babcock's infrastructure, power and wind funds,.
Macquarie Bank on Monday raised its rival offer for Alinta to at least A$7.9 billion ($6.55 billion) which includes three alternative options including all-cash, all-scrip or a combination.
Both Macquarie and Babcock & Brown, Australia's two largest investment banks, plan to carve up Alinta and put its assets, which include five power stations, gas transmission pipelines and a lucrative asset management division, into their own infrastructure funds.