KEY POINTS:
A proposed merger between Australian energy giants AGL Energy and Origin Energy may trigger a renewed takeover offer for Contact Energy, ABN Amro said yesterday.
The two Australian energy companies are discussing the creation of a $A13 billion ($14.7 billion) company, which would be Australia's biggest gas and electricity supplier. However, Origin owns a 51.4 per cent stake in Contact Energy, New Zealand's biggest listed energy company, and ABN Amro analyst Daniel Kieser said the deal would need to be cleared under New Zealand Takeovers Code.
The code requires anyone who holds or controls more than 20 per cent of a company to start a takeover bid.
"A tie-up between AGL and Origin will see AGL become an associate with Origin and its voting rights in Contact, which is likely to be in breach of the New Zealand Takeovers Code," Kieser said in a research note. If that occurred, the company would have four options; sell, begin a takeover bid, seek approval from Contact shareholders or ask the Takeovers Panel for an exemption.
AGL said it was still early in the process, but any proposed merger would look to abide by takeover rules in Australia and New Zealand. Origin said it was committed to New Zealand and its stake in Contact.
Contact's shares have been buoyed by the move. It closed yesterday at $8.62, up 7 per cent since the deal was announced two weeks ago. Origin began a takeover bid for Contact last year, which had to be scrapped in the face of opposition from Contact's minority shareholders.
Kieser said the most likely outcome was a notional takeover bid, at around market price, that would be accepted by Origin but not minority shareholders. "In summary, it is a good time to be a Contact shareholder - each option available to the combined AGL/Origin group offers further upside to Contact shareholders," he said.
- REUTERS
