Under a binding agreement, Alinta will acquire AGL’s infrastructure business and AGL will acquire 33% of Alinta’s Western Australian retail and co-generation business with the right to acquire the remainder over the next five years.

The two companies said today AGL shareholders will continue to wholly own AGL’s energy business, which will consist of the company’s current energy assets combined with 33% of Alinta’s WA retail and co-generation business.

AGL will pay $367 million for the stake in the Alinta business and will be able to acquire the remaining 67% over the next five years.

Alinta will buy AGL’s infrastructure assets and asset management business (Agility) for $A6.45 billion.

Alinta shareholders will own 55% of the enlarged entity, while former AGL shareholders will hold a 45% stake.

Two interdependent schemes of arrangement will implement the merger and subsequent spin-off of AGL’s energy business.

The transactions will create two focused and separately listed entities, which will be leaders in their respective sectors, according to AGL and Alinta. There will be no cross shareholdings between the two companies.

In their respective takeover moves, each company envisaged a merger of both entities’ assets, followed by a demerger into separate energy and infrastructure corporations. However, each company was determined that its own management would run the larger, more lucrative energy body, so this deal can be interpreted as a win for AGL.