Contact Energy has agreed to acquire New Zealand-based renewable electricity generator Manawa Energy in a cash and stock deal that implies an equity value of NZD1.86bn ($1.14bn) for the latter.
The transaction represents an enterprise value of NZ$2.34bn ($1.44bn) for Manawa Energy.
According to the terms of the scheme implementation agreement, shareholders of Manawa Energy will receive a consideration valued at NZ$5.95 ($3.66) per Manawa Energy share. It will include 0.5719 Contact Energy shares for each Manawa Energy share and NZ$1.16 ($0.71) per share in cash.
This consideration represents a 47.6% premium to Manawa Energy’s closing price of NZ$4.03 ($2.48) as of 10 September 2024.
Following the implementation of the scheme, shareholders of Manawa Energy will receive Contact Energy shares equal to 18.5% of the ordinary shares outstanding.
Publicly listed on New Zealand’s Exchange (NZX), Manawa Energy has 510MW of installed generation capacity across 26 generation schemes across the country. The company operates 25 hydropower projects around New Zealand.
The independent energy generation company also has a pipeline of over 1.2GW of secured wind and solar projects under active development.
Manawa Energy chairman Deion Campbell said: “This is an attractive acquisition offer for Manawa and achieves a significant premium to Manawa’s recent share price for shareholders, reflecting the company’s high-quality hydro asset base and its strategic development portfolio.
“The combination of our hydro schemes with Contact’s generation assets, including its base load geothermal fleet, creates a unique generation portfolio, with significant diversification benefits.”
Through the acquisition of Manawa Energy, Contact Energy aims to establish a more diversified, resilient and efficient business with complementary hydro assets. This will enable the company to offer larger volumes of fixed price electricity to the market.
Manawa shareholders will benefit from the combined company with a strategic and diversified generation portfolio, a large customer base and a significant portfolio of renewable energy development options.
Contact Energy chief executive Mike Fuge said: “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.
“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.”
Headquartered in Wellington, New Zealand, Contact Energy’s generation fleet comprises six geothermal assets, two hydropower stations, one controlled storage lake, and two thermal peaking stations.
The integrated energy company also has a development portfolio of geothermal, wind, solar and battery projects.
Contact Energy is listed on both the NZX and Australian Securities Exchange (ASX).
Subject to various conditions and regulatory approvals, including the New Zealand Commerce Commission (NZCC)’s approval, the scheme implementation is anticipated to occur in the first half of 2025.
