Waiting for a spark to ignite the energy sector

By PAUL PANCKHURST

The energy sector of the sharemarket, poised for big deals to be completed, is described as "white hot" by sharebroking firm ABN Amro.

If speculation over Contact Energy's future gets more intense, brokers will start spontaneously combusting in Queen St.

News reports said final bids were due yesterday for the international portfolio of assets owned by Edison Mission Energy, of the United States.

The grab-bag of assets includes 51 per cent of Contact, and a buyer would need to make a takeover offer for the rest of the company.

One broking firm predicted yesterday that a buyer going for 100 per cent would need to pay $6.50 - or even $7.50 - a share, compared to yesterday's close of $5.78.

That would be a $3.7 billion to $4.3 billion play.

Analysts and brokers arrive at those numbers because the company has been trading below their valuations.

However, an alternative would be for a buyer to buy the 51 per cent stake at below the market price, making the same low offer to the rest of the company's shareholders.

News reports continue to name Australian Gas Light and Origin Energy as the most likely buyers.

Besides the Edison Mission sale, a controlling stake in Powerco is on the block.

NGC and the unlisted Vector are both seen as having possible roles in an ownership shake-up in the sector.