Vector, NGC cleared for buy

By CHRIS DANIELS ENERGY WRITER

Auckland lines company Vector, the nation's second largest, has been given regulatory approval to takeover the biggest, its neighbour UnitedNetworks.

The Commerce Commission blessed the takeover attempt yesterday, saying it would mean no lessening of competition.

It also said it had no problem with NGC's plans to buy UnitedNetwork's gas pipes division.

Shares in UnitedNetworks leaped in value after the news, finishing the day up 20c at $9.40.

The commission said the monopoly power at present held by UnitedNetworks, which has assets worth $2.3 billion, would be transferred to Vector and therefore have no effect on competition in the industry.

Missouri-based Aquila, which owns 70 per cent of UnitedNetworks, is willing either to sell its shares to another party as part of a full takeover offer, or to split the company up and sell it in parts, or as a whole, to the highest bidder.

Vector has more than 270,000 customers in Auckland City, Manukau City and Papakura.

It is fully owned by the Auckland Energy Consumer Trust, an elected body, which distributes dividends from Vector to every customer connected to its network.

The purchase would make Vector by far the largest lines company in New Zealand, and would increase its electricity lines assets from more than $854 million to just under $1.9 billion.

It would take on an extra 506,000 customers, up from its existing base of 275,000 connections to its network.

Vector went to the commission last month. UnitedNetworks has cited confidentiality agreements as the reason it cannot name bidders.

It said they comprised both local and international companies.

The potential buyers are currently undertaking formal due diligence, before having to make final, binding bids late this month.

The sale is expected to be largely complete by the middle of next month.