Contact and Origin delay controversial merger

Contact Energy and Origin Energy have delayed their planned merger by two months to the end of August as they work through the documentation on the controversial plan.

The two companies said yesterday they had obtained in-principle approvals from the New Zealand Takeovers Panel, the Australian Securities and Investment Commission, the Australian Stock Exchange and Australia's Foreign Investment Review Board.

However, they were still progressing approvals and waivers from the NZX and the New Zealand Overseas Investment Office.

Now Contact expects the explanatory memorandum to be mailed to shareholders by early July, instead of its original target of later this month. It hopes to hold the necessary shareholder meetings by early August.

Contact's shares rose 2c yesterday to $8.10 in line with the price implied by the merger.

The two companies agreed to merge in February but the proposal has been criticised by shareholders on several fronts.

Investors believe the deal, in which the two listed companies will merge but keep separate legal identities and their own stock exchange listings, is designed to dilute minority shareholder rights.

They argue the merger proposal undervalues Contact and should be subject to the Takeovers Code, which requires much greater shareholder support for the deal to proceed than the current proposal. Investors hope that Origin will at least improve the terms of the deal.