Tata Power Said to Be in Talks to Buy Stake in Utility InterGen

Tata Power Co., the generating unit of India’s biggest industrial group, is in talks to buy a 50 percent stake in power utility InterGen NV, three people familiar with the discussions said.

The company, based in Mumbai, is negotiating to acquire the stake from GMR Infrastructure Ltd., the people said, declining to be identified because the discussions are confidential. At least four companies are competing for the stake with China Huaneng Group the front-runner, one of the people said. The sale may be announced in the next two months, the person said.

Tata Group Chairman Ratan Tata has made 66 acquisitions in two decades to build a group with sales of more than $70 billion. GMR Infrastructure paid $1.1 billion in 2008 for the stake in InterGen, which operates 12 power plants in the U.K., Netherlands, Mexico, Australia and the Philippines.

“The Tatas don’t have a problem with money and they are known to bid aggressively and can see a deal through,” said Jaisheel Garg, a Mumbai-based analyst with SMC Global Securities Ltd., who recommends investors buy Tata Power’s stock.

Indian companies have announced $46.5 billion of cross- border acquisitions this year, accounting for 87 percent of all deals, the highest percentage, according to Bloomberg data. That’s higher than 2007 when overseas mergers and acquisitions constituted 85 percent, or $59 billion, of the record $69.2 billion of deals, the data show.

Tata Power was little changed at 1,268.55 rupees as of 9.12 a.m. local time in Mumbai. GMR Infrastructure rose 0.5 percent to 60.2 rupees.

AIG Sale

GMR Infrastructure, based in Bangalore, bought the InterGen stake from a fund owned by American International Group Inc. The rest of InterGen is owned by Ontario Teachers’ Pension Plan.

Arun Bhagat, spokesman, GMR Group, said the company doesn’t comment on “speculative news.” Tata Power said in a statement it hasn’t bid for a stake in InterGen.

China Huaneng, the nation’s biggest electricity producer, is in advanced talks to acquire the stake for about $1.2 billion, two people with knowledge of the matter said Aug. 17.

Tata Power has 7.5 billion rupees ($160 million) of cash and 15.6 billion rupees in short term investments, according to company filings.