Commerce Commission clears Vector to buy NGC

The Commerce Commission has granted Vector clearance to buy up to 100 per cent of NGC Holdings.

Chairman Paula Rebstock said the Commission was satisfied the proposed acquisition would not substantially lessen competition in the market.

The Commission also granted Vector exemption from two sections of the Electricity Industry Reform Act. The Act prohibits electricity lines businesses such as Vector from being linked with electricity supply businesses. NGC is classified an electricity supply business because of its electricity price hedge contracts, as well as its stake in an electricity generator at the Kapuni gas plant and share of electricity retailer Wanganui Gas Ltd.

NGC's majority shareholder, Australian Gas Light (AGL), has agreed to sell Vector its 66 per cent stake for $2.91 per share. Under New Zealand's takeover code, Vector now has to extend the same offer to the remaining shareholders.

The Commerce Commission clearance and exemption follows two refusals by the Takeovers Panel to grant Vector exemptions for the deal.

Last month the Takeovers Panel refused to grant an exemption for Vector to offer NGC shareholders, but not AGL, a preferential entitlement to Vector shares when it floats next year.

The panel refused to allow Vector to offer the entitlement only to the minority NGC shareholders and not AGL, because the code required equal offers for all shareholders.

It was the second rebuff by the Takeovers Panel, which earlier had declined Vector permission to buy AGL's holding company, rather than all its individual NGC shares. The panel said this would have given special treatment to AGL -- which wanted to avoid a big tax bill.

Shares in NGC closed yesterday down 3c at $3.11, having ranged between $2.01 and $3.20 over the past 12 months.

- NZPA