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Shares in Contact Energy leaped to a record high yesterday on news of a potential merger between its majority owner, Australia's Origin Energy, and AGL Energy.
Speculation last year of a deal involving Origin has boosted it and Contact's share price to record levels.
The proposed A$13 billion ($14.7 billion) deal would create Australia's largest gas and electricity supplier. Origin confirmed the approach but said it was not in any talks with AGL and the proposal was only indicative and preliminary.
Contact shares closed up 2c at $8.25 yesterday, having peaked at $8.40.
A combined AGL-Origin group would have more than 6 million customers, a 51.4 per cent interest in Contact, New Zealand's largest power generator and retailer, and a collection of power plants and oil and gas fields across Australia.
A merger would have little immediate impact on Contact, although it should settle questions over Contact's ownership for the short term, John Norling of fund managers Alliance Bernstein said.
"Those guys over there, assuming the whole thing goes ahead, are going to be pretty busy merging two organisations, selling some assets over there and getting synergy benefits, so they're not going to have any time to worry about Contact," Norling said.
The new entity would have to sell some Australian assets, so would not need to sell Contact to raise capital, he said.
"It's not as if Contact's coming off the rails, so I would have thought for the short to medium term, it just stays as it is."
- NZPA
