Herbert Smith Freehills and Baker & McKenzie have the lead roles on Australian utility AGL Energy Ltd.’s proposed $1.37 billion acquisition of power company Macquarie Generation.

Currently owned by the New South Wales government, Macquarie Generation supplies 12 percent of the electricity consumed in Australia. It operates two thermal coal power stations, with a combined capacity of 4,640 megawatts. Sydney-based AGL Energy says the acquisition will increase its total generation capacity to more than 10,600 megawatts, bringing its share of generating capacity in the country to approximately 21 percent.

Such a consolidation may face a tough fight for approval from the Australian Competition and Consumer Commission. The commission’s chairman has recently expressed concern that, with an AGL-Macquarie merger, just three utilities would control 80 percent of the country’s generating capacity.

But AGL has pointed out that there are two utilities–Origin Energy and Energy Australia–that are already larger than the one that would be created through a merger. A final decision will be handed down by ACCC on March 4.

AGL says the deal will be financed by renounceable rights issue to existing shareholders and bank debt.

Sydney partner Philippa Stone and Perth partner Robert Merrick are leading the team at Herbert Smith Freehills advising AGL Energy.

Baker & McKenzie Sydney partner and Australia chairman Christopher Saxon is advising Macquarie Generation and the New South Wales government.

Email: azhang@alm.com.