BG granted exemption in Contact Energy bid

BG Group gets an exemption to avoid making an immediate takeover offer for Contact's thermal and...
BG Group gets an exemption to avoid making an immediate takeover offer for Contact's thermal and hydro assets. Photo from Contact Energy.
The New Zealand Takeovers Panel has granted an exemption to BG Group (British Gas) from having to make an immediate offer for Contact Energy as part of its takeover bid for Origin Energy.

Contact is 51% owned by Origin and speculation last week had been that a full offer for Origin would trigger an immediate offer for Contact.

However, in a filing to the New Zealand Stock Exchange, BG said the panel had informed the company it would not have to make an immediate takeover offer for Contact or obtain shareholder approval as a condition of the transaction Origin is making.

If the Origin bid was successful, the panel would require BG to make a cash bid for Contact within one month of the Origin offer becoming unconditional.

The value of the Contact bid would have to be verified by an independent expert approved by the panel and needed the approval from the Overseas Investment Office.

ABN Amro Craigs broker Chris Timms said the exemption bought BG some time to bed down the deal with Origin before dealing with Contact.

"The interesting thing will be that when Origin got control of Contact, the rules regarding sensitive land did not exist. The now do exist. Even though Origin is an overseas-listed company selling to an overseas-listed company, the purchase still has to go through the OIC."

BG might also have to consider what it does should the bid for Contact get turned down.

After Origin's 51% shareholding, the next highest holding was 3.8%.

Only the top six shareholders had more than 1% holdings in Contact, Mr Timms said.

There would be a lot of negotiating to do before the deal went through and it was unlikely New Zealand shareholders, who had once before fought off a bid for a full takeover by Origin, would sell.

"We believe that BG will avoid any option which relies on a Contact shareholder vote."

The pricing of Contact shares in any takeover offer could also prove difficult for BG, he said.

Shares were trading around $9.03 but ABN had them valued at a mergers and acquisitions price of $12.95 and a discount to cash flow (DCF) of $10.17.

Add a Comment

drivesouth-pow-hybrid.png

 

Advertisement

postanote_header_620_x_80.png

postanote_620_x_25.jpg

Our journalists are your neighbours

We are the South's eyes and ears in crucial council meetings, at court hearings, on the sidelines of sporting events and on the frontline of breaking news.

As our region faces uncharted waters in the wake of a global pandemic, Otago Daily Times continues to bring you local stories that matter.

We employ local journalists and photographers to tell your stories, as other outlets cut local coverage in favour of stories told out of Auckland, Wellington and Christchurch.

You can help us continue to bring you local news you can trust by becoming a supporter.

Become a Supporter