AGL agrees to sell Vector its share of NGC

9.45am

The Australian Gas Light Company (AGL) has agreed to sell its 66.05 per cent stake in gas pipelines company NGC to Vector.

Vector Chairman Michael Stiassny announced the agreement today.

The deal is worth $877.4 million in total with AGL agreeing to accept $3.00 a share. NGC shares traded on Friday at $3.06.

Mr Stiassny said the purchase of a stake in NGC was a major achievement for the company, and was consistent with Vector's long term strategy for growth as an owner and manager of critical infrastructure assets.

"The purchase of a majority shareholding in NGC is an exciting step forward for Vector as it provides the company with a number of complementary businesses for its current portfolio.

"The company has a range of high quality assets which will not only enhance Vector's strategic position, but also continue to play a major role in the country's energy industry."

Completion of the acquisition is subject to an exemption being granted by the Takeovers Panel, which would allow AGL to sell its New Zealand holding company (AGL NZ Ltd) to Vector, rather than its NGC shares. This company holds 64.2 per cent of NGC. AGL also directly owns a further 1.8 per cent stake.

An offer is expected to be made to NGC's other shareholders in due course on an equivalent basis.

The offer is also conditional on Commerce Commission approval and an exemption under the Electricity Industry Reform Act (EIRA) in regard to NGC's interest in electricity generation.

Mr Stiassny said the deal was a significant milestone for New Zealand.

"Given recent public debate on foreign ownership, we are pleased to be able to bring another valuable infrastructure asset back under majority New Zealand ownership."

The deal with AGL may see Vector floated on the share market.

- NZPA