Contact Energy Ltd (ASX:CEN) is boosting its footprint in the renewable energy space by entering into an agreement to buy out New Zealand-listed Manawa Energy Ltd.
Contact has entered into a court-approved Scheme Implementation Agreement (SIA) to acquire 100% of Manawa, which is one of the country’s largest renewable energy generators.
The latter company will be an important addition to Contact as it seeks to diversify its portfolio. Manawa owns and operates 25 hydro schemes around New Zealand, has
around 500 megawatts (MW) of generation capacity – which is winter-weighted – as well as over 1,200MW of geographically diversified, secured development options in wind and solar.
The agreement is backed by major Manawa shareholders Infratil and TECT Holdings, who hold or control between them 77.9% of Manawa shares, and have said they will vote n favour of the Scheme subject to certain conditions.
As part of the agreement, eligible Manawa shareholders will receive 0.5719 shares in Contact for each Manawa share (this being equivalent to $4.79 per Manawa share), plus cash consideration of $1.16 per Manawa share.
They will then take on around 18.5% of Contact shares once the scheme is completed.
Final approval will come from the New Zealand Commerce Commission (NZCC), with this to be implemented in the first half of 2025.
Contact chief executive Mike Fuge said the acquisition was an important step.
“This acquisition will make Contact Energy a stronger, more resilient electricity company for
New Zealand with a more diversified generation portfolio across the North and South
Islands,” he said.
“Our hydro assets are complementary, with different seasonal generation profiles, which will
help Contact to better manage dry year risk and to sell larger volumes of fixed price
electricity into the market than we could independently.”
Investors appeared pleased with the news, and by 12:47 AEST, Contact shares were trading at $7.57 cents – a rise of 0.13% since the market opened.