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Utilities investor Infratil has reached a deal with Alliant and Tauranga Energy Consumer Trust giving it control of Trustpower at a bargain price.
It beat off competition from Australian rivals in the process.
Infratil said yesterday it had conditionally agreed to buy all the shares in American energy giant Alliant's New Zealand holding company, which has as its main assets a 23.77 per cent stake in Trustpower and a 5.07 per cent stake in Infratil.
The purchase price for Alliant Energy New Zealand was about $445 million, Infratil said.
Overall, the deal means Infratil is paying about $465 million or $6.22 a share for Alliant's Trustpower stake.
That is well below the almost $524 million or $7 a share it was worth on the market shortly before the purchase was announced yesterday.
Added to Infratil's existing 35.2 per cent, the purchase from Alliant takes Infratil's holding in Trustpower to about 58 per cent.
But Infratil intends to sell some of the Alliant stake to leave it with 50.1 per cent.
It has agreed to give long-term partner Tauranga Energy Consumer Trust, which has 28.6 per cent of Trustpower, the option to buy 14 million shares or 4.4 per cent of the company at $5.90 a share.
The trust will also get an option to buy up to 10.95 million Infratil shares - equal to Alliant's 5.07 per cent holding - at market price.
Infratil chief executive Lloyd Morrison said yesterday it was likely the trust would exercise those options, leaving his company with a net purchase price for its increased stake of about $290 million.
That would be funded initially through bank debt but eventually through Infratil's existing bond programme.
Under Infratil's deal with the trust, it will support changes to Trustpower's constitution which will confirm the company's Tauranga base, guarantee the trust a seat on the board and place a limit on debt ratios.
Trustpower, New Zealand's fifth-largest power retailer, had been an important investment for Infratil since 1994, and chairman David Newman believed it would continue to be an exceptional performer.
Morrison said Infratil's interests in renewable energy were an example of the company's "overt positioning" to capitalise on the emerging economic effect of climate change.
Alliant has been selling several of its overseas businesses in recent months, and investigated a sale of its New Zealand holdings through a trade sale and a bookbuild to institutions and private investors.
But Morrison said that because Infratil and the trust had effective control of Trustpower, any other single buyer of Alliant's stake would have remained on the outside.
That had seen off "considerable interest from Australian parties".
He also believed a placement to the market of such a large amount of Trustpower stock would have been at a big discount to the market price.
AMP Capital Investors' head of equities, Guy Elliffe, said there had been considerable interest in the prospect of a market placement.
"I would imagine that a lot of people would now regard Infratil as an attractive entry into Trustpower if they were hyped up about the story and wanted to buy some."
Infratil shares closed 24c up at $4.59.
Settlement of the deal, scheduled for December 29, needs approval from Infratil and Trustpower shareholders.
Morrison said Infratil would make a bid for the rest of Trustpower's shares if shareholders voted for it.
But as that would be at Infratil's purchase price of about $6.20 a share, minorities were unlikely to find it attractive.
