In a complicated cross shareholding, Aquila holds its interest in United through Power Partnership, which is jointly owned with AMP Henderson Global Investors while United, through WA Gas Holdings holds an interest in AlintaGas in conjunction with Aquila.

AlintaGas chief executive Bob Browning said the Perth-based company had a structure in place to finance the deal without the need for new equity.

"In our strategy, AlintaGas is interested in having a strong presence in regulated network assets across Australia and maintaining our efforts in retail sales in Australia, which includes both gas and electricity," Mr Browning said.

Some commentators believe a merger between AlintaGas and United may be a precursor to rolling in other assets - specifically the $1.3 billion Multinet gas asset and pipeline owner GasNet Australia, which is owned by AMP Henderson and Aquila.

Missouri-based Aquila has struggled under debt as the US energy sector imploded following Enron's collapse.